How much will the earthquake cost the Turkish economy?

The earthquake centered on Kahramanmaraş also affected Malatya, Adıyaman, Hatay, Kilis, Adana, Şanlıurfa and Diyarbakır. As of today, the loss of life in the earthquake has exceeded 36,000, the number of injured has exceeded 100,000, and the number of buildings destroyed has exceeded 6,000.

With the first calculations of the economists, different estimates of the cost of the earthquake emerged. However, it has become a general expectation that the earthquake also caused a drop in growth.

WILL AFFECT GROWTH

The earthquake is expected to cause billions of TL in reconstruction costs in the Turkish economy and cause a slowdown in growth this year. While 13.42 million people lived in 10 earthquake-affected provinces, cities like Adana, Hatay and Gaziantep stand out with their agricultural and industrial basins.

According to TUIK’s 2021 data, the share of the region consisting of 10 earthquake-affected provinces in GDP is 9.3 percent. In terms of sectors, the share of the earthquake zone in agriculture is 14.3 percent and its share in industry is 11.2 percent.

Although it is not known exactly how big the production loss will be, the 11 percent loss in electricity consumption data compared to a week ago is an indication that the earthquake will have significant effects on economic growth.

TÜRKONFED: 84 BILLION DOLLARS MAY BE DAMAGE

The business organization Turkish Enterprise and Business Confederation (TÜRKONFED) stated in its preliminary report on the subject: “The Kahramanmaraş earthquake has a total of 84.06 billion dollars, of which 70.75 billion dollars is damage to housing, $10.4 billion is lost national income and $2.91 billion is lost in work days. “It is expected to cause billions of dollars in damage,” he said.

In the report, “It can be estimated that the exports of 10 provinces that were exposed to disasters, in parallel with the decrease in the contribution of the provinces to the national income, may fall below the level of 15 billion dollars, with the impact the deterioration of the port infrastructure that supports exports”.

JP MORGAN: THE DAMAGE WILL BE $25 BILLION

US investment bank JPMorgan also estimated that direct damage to buildings and infrastructure caused by the devastating earthquakes in Kahramanmaraş would cost 2.5 percent of GDP, or $25 billion.

“The earthquake in Turkey caused a tragic loss of life and will have significant economic consequences,” Fatih Açelik, an economist at JPMorgan, said in a note to bank clients.

GOLDMAN: THE ECONOMIC IMPACT MAY BE LESS THAN EXPECTED

Goldman Sachs economists, on the other hand, stated that it is still too early to determine the damage of the earthquakes to infrastructure and the general economy in Turkey, but findings from previous earthquakes indicated that the effect on growth may be surprisingly small in compared to the damage to social capital.

Goldman Sachs economists Clemens Grafe and Başak Edizgil made the following assessments in their note:

“The 1999 Marmara earthquake affected an area whose share in GDP was more than three times higher than the current earthquake. An academic study revealed that the cost of that earthquake amounted to 1.2 percent of GDP. Given these results and the region’s share of growth, we estimate that the cost of last week’s earthquake to GDP may be well below 1 percent.”

‘THE 35 BILLION CAN FIND’

According to the report prepared by strategist Evren Kırıkoğlu, founder of Sardis Research Consulting, the total cost of the earthquake is estimated at 25-35 billion USD.

In the report, a loss of $8 billion was predicted down 1 percent from 2023 growth. In addition, damage replacement costs were estimated to be between $17 and $27 billion, depending on spending. from the public and the construction cost of TOKİ.

Therefore, the total cost of the earthquake was predicted to be between 25 and 35 billion dollars. Some of this cost could be recouped in the report if growth in the next few years is above normal due to post-earthquake recovery.

MAY DECREASE GROWTH BY 1-2 POINTS

The three economists, whose calculations were referred to by Reuters, also earned around $50 billion. costHe stated that it is possible. B.an economics official “Earthquake cost It looks like it will come to about $50 billion, but you have to take into account the many side effects that this has,” he said.

Economists calculated the impact of the earthquake on national income as a loss of between 0.6 and 2 points. The economists took a scenario in which production was interrupted by 50 percent and this decline was made up in 6 to 12 months.

“Billions of liras of damage will occur,” a senior official told Reuters. Of course, it will take time to determine the exact framework for this, but it is possible to expect a decline of at least 1 percent, maybe 2 percentage points of the projected growth for this year,” he said.