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On April 25, Finance Minister Berat Albayrak was beaming at the cash register, stating that the support in Turkey’s coronavirus economic rescue package had been doubled to TRY200bn from the TRY100bn announced back on March 18. His figures included tax cuts that will never accrue such as taxes on flight tickets at a time when all flights are forbidden.
TRY120bn is the value of loans extended to companies while only TRY22bn has gone to 4.4mn families, or TRY1,000 per family, a figure even below the “employed unemployed’s” TRY1,177 for each of three months.
Meanwhile, the country’s food inflation woes are growing, not that this is seen in the official inflation data.
On April 19, government-run Anadolu Agency reported that the Agriculture Ministry had launched an “emergency action plan” for legumes. Wheat prices faced by Turkey and its wheat supplies, meanwhile, may be hit by Russia’s export restrictions.
On April 24, the World Trade Organization (WTO) and the International Monetary Fund (IMF) called in a joint statement for the lifting of trade restrictions on medical supplies and food.
“Volatility in food prices” ​“We are likely to see much more volatility in food prices [in EMs]—so initially a spike in demand for food as people go into lockdown, then a drop as the poor use up disposable incomes, then a spike again as a shortage of labour to sow and harvest impacts back on supply,” Timothy Ash of Bluebay Asset Management said on April 23 in a note to investors.
“Turkey is likely to record one of the steepest falls in GDP [at 8.3%] in the [Emerging Europe] region this year. Scope for further monetary easing is limited by currency concerns and fiscal policy will need to cushion the hit to the economy. Meanwhile, there is a growing risk that banks will struggle to roll over their large external debts, raising the threat of a wave of bank defaults and an even steeper downturn,” Capital Economics said in its “Emerging Europe Economic Outlook – Q2 2020” note.
Some 90% of Turks now see the coronavirus crisis as a serious threat to the Turkish economy, according to an Ipsos’ survey conducted between April 9-13. The survey recorded a figure of 70% for March 13-16.
When those who see the virus emergency as a partial threat are added, almost all Turks see risks to the economy, Ipsos Turkey CEO Sidar Gedik told T24.
The latest survey also found that 61% of Turks intended to take measures in relation to the virus even after the official announcement of the end of the outbreak. This is bad news for the government. It dreams of returning to “normal” in mid-May. The plans for mid-May include transporting local tourists to holiday resorts and filling shopping malls.
Quarantine in Marmaris ​“Shopping malls [in Turkey] may well be open and domestic flights reactivated by mid-May but who will have money to shop and fly I don't know. Turkey's tourism sector may be severely handicapped by quarantine restrictions. For example, if you book a bargain basement two-week package holiday in Marmaris this summer but when you land, you must spend that fortnight in quarantine, this may discourage you. Maybe if you are missing lockdown, you could fly to the Aegean and recreate the tedium?” Julian Rimmer of Investec remarked on April 28 in a note to investors.
Ask Turkish tourism industry representatives for their outlook and they will tell you that a 50% contraction this year in their sector is an optimistic forecast,
27​ TURKEY Country Report​ June 2020 ​ ​www.intellinews.com