The Media Line: Quake To Impact Turkey’s Already Hard-hit Economy, Analysts Say

Quake To Impact Turkey’s Already Hard-hit Economy, Analysts Say

Ankara quickly appeals for international assistance as death toll climbs

By Kristina Jovanovski / The Media Line

The massive earthquake that hit southeast Turkey will likely put major pressure on the country’s economy amid an already dire financial situation, analysts told The Media Line.

Turkey and Syria continue to reel from the deadly powerful earthquake that hit the border region early Monday morning, with the death toll now at more than 7,500.

It is feared the figure will rise further as people continue to be stuck under the rubble and weather hampering rescue efforts, making the full scale of the destruction not yet known.

Cem Çakmaklı, an assistant professor of economics at Koç University in Istanbul, told The Media Line that the quake will put more pressure on the region.

He said the large size of the region that was impacted will make it difficult to distribute aid, with likely debates over how much money goes to which cities and which industries.

“The main issue is how much money will be required for the reconstruction of the region and whether it will be doable with local credit,” he said, adding that it was likely foreign assistance would be needed.

Turkey’s economy has already been struggling, with massive currency devaluation in recent years.

The official inflation is at a staggering 60%, although independent economists believe the number is much higher.

Ankara has already gone on a spending spree to provide extra support, such as by increasing the wages of public sector employees and subsidizing utilities.

“The extent of how the economy’s hit from this earthquake … will be clearer once the specific damage can be identified,” Çakmaklı said.

He believed that since Turkey asked for international help, it would eventually look to international financial organizations, such as the World Bank and the International Monetary Fund, for assistance.

Çakmaklı said one positive note for the economy was that it seemed, so far, that there was less damage to commercial buildings, compared to residential ones, meaning that businesses would be less affected.

The company SASA Polyester said on Monday that its facilities in Adana were not significantly damaged, and that production continued.

Turkey has one of the 20 largest economies in the world and experienced rapid economic growth under Turkish President Recep Tayyip Erdoğan.

However, it is now facing its second huge natural disaster in 24 years, following a 1999 earthquake that killed more than 17,000 people.

The massive quake on Monday will likely have a major impact on Turkey’s finances.

“This could be another thing that drains Turkey’s reserves and strains its economic situation,” Ryan Bohl, a Middle East analyst for the risk intelligence company RANE, told The Media Line.

The epicenter of the earthquake hit close to one of the main production and industrial capitals in the country, which is the city of Gaziantep.

Thousands of factories are based in this southern city of nearly 3 million people, near the Syrian border.

According to official Turkish data, production has stopped on a large scale in the city of Gaziantep over fears of aftershocks in the coming hours and days.

The tourism sector will also be affected within a short period, and when this significant source of foreign currency will pick up again, depends entirely on when people’s confidence is restored and economic life is stable throughout the country.

The performance of Erdogan’s Justice and Development Party (AKP) in this crisis could prove consequential to the country’s future, with parliamentary and presidential elections to be held by June.

While relations with many of Turkey’s allies have soured in recent years as ties with Russia have strengthened, Ankara quickly made an appeal for international help after the quake.

That was met with promises of assistance around the world, with international crews already arriving in southeast Turkey.

Germany stated it is sending generators, tents, blankets, and water purification units and will help provide emergency shelter after the earthquake.

US President Joe Biden promised to “provide any and all needed assistance” while French President Emmanuel Macron tweeted that his country was ready to send emergency aid.

Bohl stated that countries would be limited in providing help due to their own struggling economies.

“We’ve seen aid numbers decline across the board. But I definitely think the United States and all of NATO, and in fact, countries like Israel and the Gulf Arabs, will all be providing humanitarian aid. It’s just an open question how much they are willing to [give], given all these economic issues they are all facing,” he said.

Several Republicans in the U.S. have fought against aid being provided in Ukraine, arguing that the government should focus resources on domestic issues.

“Even with the Ukraine aid, the White House is getting flak from the Republicans for that, saying the money should be kept at home,” Bohl said.

“I think they will face a similar constraint for humanitarian aid for Turkey and also for humanitarian aid for northwest Syria.”