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Odds on Turkish recession start to shorten

Turkish policymakers left interest rates unchanged today, but hinted that further policy loosening may be on the way. Yet even if additional stimulus is ultimately justified by a renewed downturn in the world economy, Turkey’s large current account deficit will make it difficult to offset external weakness with an expansion of domestic demand. Accordingly, it seems increasingly likely that the Turkish economy is heading for a sharp slowdown – or even a recession.

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