Syria tensions, coronavirus fears, Turkish credit growth

Concerns about the coronavirus outbreak have hit global financial markets this week, but assets in Turkey and Russia have taken a further leg down due to tensions between the two arising from the conflict in Syria. This has led to growing concerns of outright conflict between the two sides, but history suggests that the impact on financial markets is likely to be contained. Meanwhile, the risks of coronavirus disruption to Central and Eastern Europe are becoming clearer and the downside risks to our forecasts are mounting. Finally, Turkey’s central bank appears to be increasingly concerned about the effects of rapid credit growth, supporting our view that interest rates will be hiked later this year.