Turkey’s incursion in Syria may leave its own economy wounded

Turkey's incursion in Syria may leave its own economy wounded
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BEIRUT/ANKARA (Reuters) – One casualty of Turkey’s military incursion into Syria may be its own recovery from recession after U.S. congressional leaders threatened sanctions that could hit the lira and harden Turkish distrust of Western allies. Syrian Kurds protest the Turkish offensive against Syria during a demonstration in front of the United Nation Headquarter in Erbil, Iraq October 10, 2019. REUTERS/Azad Lashkari Turkey’s currency – which suffered a crisis a year ago due in part to U.S. sanctions and tariffs – hit its weakest level in nearly four months after U.S. troops left northeast Syria and Ankara ordered attacks on Kurdish forces there. In recent months the lira had steadied and inflation had fallen, suggesting Turkey’s $766 billion economy, the largest in the Middle East, had left behind its worst slump in nearly two decades. The central bank has slashed interest rates since July to kick-start lending. But by Thursday, market expectations tmsnrt.rs/2HFCPtg for further policy easing were reined in as investors worried that fallout from the conflict could delay the recovery. The risks include higher deficits and borrowing costs and slowing tourism if Turkey’s military gets bogged down over a long period. But the biggest threat – and one that investors say is not priced into Turkish assets – is a new determination among senior U.S. Republicans to punish Turkey for attacking Syrian Kurds, key allies of Washington in the battle against Islamic State. Republican Senator Lindsey Graham, usually a strong defender of Donald Trump, on Wednesday joined […]

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