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Turkish economy faces fresh turmoil over Syrian operation

Ankara’s new military campaign in Syria has raised the specter of fresh trouble for the crisis-hit Turkish economy, but the government hopes to compensate with political gains.
A merchant counts Turkish lira banknotes at the Grand Bazaar in Istanbul, Turkey, March 29, 2019. REUTERS/Murad Sezer - RC1275079610
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Ankara’s launch of a long-expected military move into Kurdish-held areas in northeastern Syria has worsened the prospects of the already ailing Turkish economy, drawing threats of sanctions by the United States and the European Union (EU), atop the country’s currency woes and swelling debt. The Turkish lira has tumbled and Turkey’s risk premium has shot up since the operation kicked off Oct. 9, triggering fresh financial jitters that seem to weaken newfound hopes of an economic rebound after almost a year of contraction. 

The military campaign — launched after a perceived green light from Washington and with the stated aim of creating a safe zone against terrorist threats by Kurdish groups and the Islamic State — creates fresh uncertainties for the economy, threatening to stymie any fledgling prospects of renewed growth. Fears are rife that military expenditures will aggravate the Treasury’s deficits, fuel borrowing needs and eat into funds that could be otherwise used to stimulate the economy.

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