Turkish Cross-Border Operation Into Afrin Seems To Have No Negative Effect On Its Economy

How much of a strain is the Turkish incursion into the mainly Kurdish enclave of Afrin in norther Syria? 

This was one of the major questions as the military cross-border operation involving tens of bomber jets and a massive push on the ground, entered its second week. But, perhaps surprisingly, markets reacted calmly to the dramatic event. 

''Money poured into Turkish stocks, bonds and the lira. Vakıfbank, a Turkish state-run lender, was able to sell a record amount of bonds on international markets and at lower cost than expected,'' wrote Mark Bentley, in this excellent analysis, taking the pulse of financial experts.

With emerging markets awash with liquidity, Turkey could conceivably continue its war in Afrin for weeks or months without serious repercussions. Investors take the view that, unless Turkey clashes with one of the major forces on the ground in Syria - the United States, the Syrian army, or Russia - then this operation will not have a major impact...” –  İnan Demir, Nomura, London

The data defies the predictions of a financial setback, too.  Business confidence for January was on the rise. And consumer confidence, a main indicator for the voter trends, reversed after months of declines, say the official statements by the Central Bank.

The overall positive tone for the markets and the economy appears to support the government’s assertion that the armed confrontation will have no significant impact.

Is the ground for snap elections ripe, then? 

Bentley's analysis argues that 'Erdoğan could also use the campaign in Syria as a springboard for early elections, possibly to coincide with the anniversary of the July 15, 2016 coup.'

“He never goes for early elections, but if he sees opinion polls doing better, I think he’ll go. I do think he’ll go this time.”  – Tim Ash, senior analyst, BlueBay Asset, London