Turkey’s foreign trade deficit increased by 180 percent within the past year, as COVID-19 prevention measures decreased exports dramatically, with imports remaining stable. The ratio of exports to imports dropped by nearly 20 percent in the past year.
One out of every four workers in Istanbul has become unemployed due to the coronavirus, according to a report of the main opposition CHP. Some 66.2 percent of the workers in the megacity have also experienced a decline in their wages, the CHP said, basing its report on surveys and field works.
Turkey is in dire need of a source of external funding granted through a credible international institution in order to combat the economic impact of the coronavirus, according to a research of five Turkish economists. The study said that although a swap agreement with the U.S. Federal Reserve as well as the IMF could help Ankara to battle the crisis, the arrangement of a swap line alone would likely be insufficient.
The Turkish Central Bank revised its year-end inflation forecast to 7.4% for 2020, down from 8.2%. In an online presentation on April 30, Governor Murat Uysal said the coronavirus pandemic brought on "extraordinary circumstances" in which temporary volatility was expected in the bank's financial buffer.
According to a recent report by a union of public employees, inflation levels for basic consumer goods in Turkey has reached 29.1 percent compared to last year. Fruit prices have surged by 80.6 percent, while the prices of dairy products and eggs have climbed by 27.6 percent since April 2019.
Turkey will be using an intricate method of customs inspections that will delay imports, in an attempt to decrease the country’s foreign trade deficit. As exports have dropped significantly during the COVID-19 outbreak, Turkey’s import costs have opened a large budget deficit.
Turkey’s biggest trade union confederation Türk-İş has calculated the hunger threshold – which indicates the minimum amount of money needed to save a four-member family from starvation a month – as 2,374 liras ($340). On the other hand, workers who have been put on unpaid leave due to the coronavirus outbreak are receiving an emergency state aid of 39 liras per day, corresponding to 1,177 liras a month.
Turkey's Central Bank on April 22 cut its benchmark interest rate by a percentage point to 8.75 percent in order to shore up an economy hit hard by the coronavirus outbreak. The bank’s policy committee said in a statement that fallout from the coronavirus outbreak has started to hit trade, tourism and domestic demand so it was “crucial” to ensure markets are functioning and credit is flowing.
Turkish economy will see a contraction of 1.4 percent in 2020, with drops in the second and third quarters of 8.6 percent and 5.3 percent respectively, according to a Reuters poll. “We think that all sectors of the economy will be affected by COVID and we assume that most of the negative impact would concentrate on Q2-Q3 2020,” economists said.
DEVA Party leader Ali Babacan has said that Turkey shouldn't rule out borrowing loans from the international institutions, saying that it should choose cheap IMF loans over high-cost borrowing from markets. "Turkey has the right to use them with unconditional 1 percent interest. Instead of going to the markets and paying 7 percent, we can get loans from these institutions with 1 percent," he said.
The Economic Policy Research Foundation of Turkey (TEPAV) predicted that the country’s economy would shrink by 40 percent if the COVID-19 outbreak were to last a year. While the tourism, culture and entertainment industries would suffer the most, government expenditure is projected to grow by 20 percent.
Uğur Gürses writes: According to the International Monetary Fund's (IMF) World Economic Outlook report, a worldwide recession of 3 percent is anticipated for 2020, while Turkey's economy is expected to shrink by 5 percent this year. Given that the IMF's forecasts are always somewhere between “moderate” and “cautious,” realistic expectations are likely to result in a more negative picture.
Turkey's current account balance of payment registered a deficit of $1.23 billion in February, 10 times higher compared to February 2019, according to figures released by the Central Bank.
Gold prices spiked April 13 as one gram of gold was priced at 367 Turkish Lira at the start of the day, and one ounce of gold was priced at 1686 lira.
Turkey has held talks with the United States about possibly securing a swap line from the Federal Reserve and has discussed other funding options to mitigate fallout from the coronavirus outbreak, anonymous Turkish officials told Reuters on April 10. “Aside from the IMF, Turkey is looking at every kind of option for resources and is involved in various contacts,” one of the Turkish officials said.