Spotlight: Coronavirus poses fresh threat to Turkish economy

Source: Xinhua| 2020-03-24 02:13:30|Editor: huaxia

by Burak Akinci

ANKARA, March 23 (Xinhua) -- Despite a government stimulus package, Turkey's economy which just started recovering from a recession may face the long-term impacts of the novel coronavirus outbreak, experts said.

As of Sunday, Turkey's health officials have announced 30 deaths and over 1,200 cases of the COVID-19, as drastic measures are implemented to push citizens to stay at home to curb the spread of the highly contagious virus. The country has closed all non-essential shops, schools and public places.

Turkish President Recep Tayyip Erdogan announced last week a 15.4-billion-U.S. dollar stimulus package to cushion the economic effects of the epidemic, which includes a 6-month suspension of social security premiums, and tax reductions and suspensions for various sectors such as retail, malls, iron-steel, automotive, textile and logistics.

While the plan has been generally hailed by employers, experts have argued that unlike some European countries, it does not foresee direct cash injection to households which are already reeling under the burden of high inflation and unemployment.

"Suspension of tax payments will not be enough. We should take economic and social measures like other countries, otherwise unemployment will rise and we will all suffer," local independent economist Veysel Ulusoy said.

The expert urged the government to take firm actions including closing all private enterprises and taking the responsibility of paying most of the workers' wages.

Turkey has also imposed a curfew for elderly people who are 65 and over. However, Ulusoy emphasized that a total of 850,000 people in the age group are in the workforce and that they should be considered to be paid on leave.

Ulusoy argued that the gravity of the pandemic requires short-term actions taken in Turkey which, like other emerging markets, faces deep challenges.

The particular threat facing Turkey now is the massive losses hitting manufacturers and service providers.

"The economy is already under stress. We were in a process of normalization and then with the COVID-19 outbreak, it could bring the economy back to before," Enver Erkan, an economist of the Istanbul-based Tera Investment, told Xinhua.

The expert pointed out that the economic package that Ankara announced could be insufficient for a state as big as Turkey, if the coronavirus lingers for months.

"Additional measures could well be announced ... What's important in the short-term is to prevent lay-offs and this issue is not quite addressed for the moment," Enver said.

"The effective way to deal with this problem would be a direct cash injection to households because if people don't consume, the economy naturally suffers," he added.

Two months ago, Ankara has just started a gradual recovery from the economic crisis that has hit Turkey since a currency diving in 2018, and the country was expecting a growth of over 5 percent in 2020.

The central bank reduced interest rates in a move that encouraged loans before the pandemic outbreak. The disease is due to have an impact on the workforce amid a 13.7-percent unemployment in 2019, with youth unemployment of about 25 percent last December.

Some owners have shut down their stores and some businesses have started to lay off workers to ease the first shock of the outbreak, local press reported. But there is no official data yet on the action which could have a negative effect on the economy.

The Turkish lira has declined sharply in recent weeks, reaching one of the lowest levels since August 2018, as foreign investors are leaving the country. The nation's consumer price inflation also rose to 12.37 percent year-on-year in February.

The coronavirus is also dealing a tough blow to the tourism sector which was instrumental in helping the economy revive from the 2018 currency meltdown.

Last year, tourism brought in the much-needed 34.5 billion U.S. dollars. Despite measures to counter the coronavirus, revenues are inevitably expected to shrink this year as the sector is recording large number of cancellations, the Turkish Tourism Advisory Board said.

Turkey's flagship carrier Turkish Airlines has halted on Sunday all international flights except for five routes.

"There is no other word to describe the situation other than 'bad.' The upcoming travel season (summer) is compromised, even if the outbreak is controlled in the coming months," Sami Demir, a travel agent from Ankara, told Xinhua.

He stressed that many businesses, especially small ones, may inevitably go bankrupt and cause a new wave of unemployment.