Initial economic analyses from Türkiye and beyond are based on simply two foundation:
1- Basic Comparison with the 1999 Izmit Earthquake & Reconstruction
2- Probable Decline in Production Capacity & Financial Burden caused by Funding Need
Some Turkish economists and easy-peasy viewers see the historic earthquake as something experienced before. That must be why they look very calm and well-prepared with their high standard scientific self-esteem. However, their overly dignified analyses could not prove beyond a quality of “if 10x cause 10 in 1999, in 2023 10x cause about 10.”
Thanks to each.
JP Morgan’s Initial Analysis on the possible cost is: $25 Billion or 2.5% of GDP; European Bank for Reconstruction and Development (EBRD): Potential economic impact could result in a loss up to: 1% of GDP (Reasonable Estimate born of fair Plus-Minus calculation); Turkish Enterprise and Business Confederation: Cost is up to $84 Billion or 10% of her GDP; IMF Executive Mohieldin: Turkey has proven resilient. Very unlikely to impact Turkey’s GDP to the same level as the 99 Izmit Quake; World Bank’s estimate is %34 billion damage equivalent to 4% of Turkey’s 2021 GDP, which means we think it will be about %3.2 of her 2023 estimated GDP.
Will it be 1%, 2.5%, 3.2%, or 10%?
Many thanks to each.
What MAZ Corporate simply tells us about the impact?
The earthquake’s probable effect on the Turkish economy has not yet been studied in terms. Although it is absolute that the cost of the earthquake will affect payments and borrowings, we are unclear on what Turkish people will face in the short-middle-long terms.
Time is naturally needed to see the consequences in: Production Capacity – Production Costs (loss), Government Spending (loss), Cost of Reconstruction (loss in the short term, relative gain in middle-long terms), Effect on External Debt (loss), Already Bitter Inflation (loss)
Do we have a rational say without a need for time?
Economic problems of Turkey that have been going on since 2014 had turned into desperation with the Corona Crisis. Now with the tragic earthquake, the possibility of Turkey falling into deep helplessness is increasing.
To me, it is very likely in all terms that The Cost of Earthquake will force Türkiye to take a step back in many areas, although she does not seem to be compromising in her relations with the West, which she has been trying to repair silently and proudly since the Corona.
Muhammet Ali Zurnaci, February 26, 2023, Istanbul