Ratings agency Moody’s said on March 25 that it expects Turkey’s economy to be the hardest hit out of all the G20 economies from the impact of the coronavirus (COVID-19) economic shock, with a cumulative contraction of 7% in this year’s second and third quarter GDP.
In an update of its global macro outlook for 2020-21, the ratings agency said: “We have revised our 2020 growth forecasts downward for all G-20 economies, with the exception of Saudi Arabia (A1 stable), where the decision to increase oil production to 12 million barrels a day until June, will support GDP growth in 2020.
“In other emerging market countries, a sharp reduction in GDP in the second quarter is inevitable, reflecting both domestic restrictions and a steep fall in external demand. We expect Turkey’s (B1 negative) economy to be hit the hardest, with a cumulative contraction in second- and third quarter GDP of about 7.0%. The shock will likely take a large toll on Turkey’s tourism-related sectors through the summer.”
Tourism accounts for around 13% of Turkey’s $750bn heavily foreign debt-burdened economy.
The Turkish lira (TRY) has endured another bout of depreciation with world financial markets coming to terms with the extent of the damage likely to be wrought by the COVID-19 pandemic—with this week seeing its weakening against the dollar to date in 2020 reaching 10%—but March 25 saw the currency gain to its strongest level in a week, at 6.37 to the USD compared to 6.56 on March 23, as emerging markets rode a bounce after the US Congress agreed its stimulus bill to alleviate the coronavirus impact.
Istanbul’s main share index, the BIST-100, on March 25 edged down 0.25% to 89,063. Turkish Airlines and Pegasus Airlines shares were buoyed by a government measure exempting them from paying compensation to customers over flights cancelled due to the pandemic until two months after flight bans are lifted.
Data released on March 25 showed Turkey’s capacity utilisation rate (CUR) declined to 75.3% in March from 76.0% a month earlier, while business confidence among Turkish manufacturers fell to 99.7 points in March from 106.9 points in February, Reuters reported, noting that the figures were indicating the first signs of a broader slump that could carry on through mid-year.
Also on March 25, Ankara introduced a law enabling credit guarantee institutions to double the funds they can raise to Turkish lira (TRY) 50bn, state-owned Anadolu news agency reported. The government also scrapped tariffs on ethyl alcohol imports, according to the Official Gazette.
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