Turkish Economy Faces more Headwind amid COVID-19 Pandemic

The COVID-19 pandemic and its economic fallout appear to have compounded Turkey’s economic woes. As trade falls, tax revenue decrease, and the Turkish lira tumbles, the Central Bank appears to be near out of options.

Turkish Economy Faces more Headwind amid COVID-19 Pandemic

Official figures released by Turkey’s Ministry of Trade illustrate the negative consequences that the COVID-19 pandemic has had on the country.

In April, Turkish imports decreased by 41.38 percent year-over-year. The country’s exports also decreased by 28.31 percent, amounting to a loss of around 12.95 billion US dollars.

Turkey’s foreign trade deficit also fell to 3.96 billion US dollars, a 34.3 percent decrease compared to 2019.

In a written statement issued on May 11th, the Ministry said “the consequences of the COVID-19 pandemic, which have been badly affecting the world in economic and social terms since March, were very sharp and severe on the economy in April and this negatively affected our exports”.

Such indicators show the extent to which the pandemic and governmental countermeasures have fundamentally affected Turkey’s already ailing economy.

Over the last three months alone, the Turkish lira lost more than 20 percent of its value against the US dollar. After spending to stabilize the currency and help victims of the virus, the Turkish Central Bank ran a deficit on its foreign exchange reserves when excluding borrowed reserves from other countries, swap deals, and private banks shares.

State tax revenue also decreased dramatically by more than 40 percent over the last three months. Istanbul, the center of the Turkish economy, paid 52 percent less tax year-over-year in April.

According to official data, nearly 16,000 companies have gone bust during the crisis and hundreds of thousands of people have lost their jobs or been forced to take unpaid leave.

While its number of daily registered COVID-19 cases and deaths have recently decreased, Turkey still remains one of the worst-affected countries, with 159,797 cases registered so far. Some 4,431 people have lost their lives as a result of the disease.

In mid-March, the government unveiled a 15.5 billion US dollar package of measures aimed at supporting the economy. This included the postponement of loan and tax payments as well as financial aid to employers and workers.

Unfortunately, many economists, labor unions, and political opposition figures say that these efforts will likely fall short.

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