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WorldAsia'European development': Earthquake depletes Turkey's economy, losses are shocking

‘European development’: Earthquake depletes Turkey’s economy, losses are shocking

The European Bank for Reconstruction and Development said inflation had started to fall after energy prices rose following the war in Ukraine, but the average inflation rate was still 14.3 % in the areas of activity of the bank in March.

Regarding the Turkish economy, the bank lowered its forecast for the growth of the country’s economy due to the impact of the devastating earthquake, by half a percentage point, to 2.5% in 2023, after registering a growth of 5.6% in 2022, mainly driven by the monetary policy which the bank described as “unconventional”, which includes the reduction of interest, even if inflation rose to 85% in a year in October, before recently dropping to 50%.

The bank estimates quake damage exceeds $100 billion, but reconstruction efforts will boost growth in 2024 to 3%.

“In recent years, Turkey has prioritized growth over macroeconomic stability. There is a limit to how long the fundamental laws of economics can be ignored,” said economist Beata Yavorczyk. Chief at the European Bank for Reconstruction and Development.

She added that as Turkey heads into a second round of its presidential elections, “no matter who wins, tough choices await the next government.”

In Ukraine, the bank expected economic growth of 1% this year, after an unprecedented collapse in GDP of 29% in 2022 with the start of the war.

“Producers face frequent power outages, damage to their facilities and infrastructure, logistical challenges, labor shortages and occasional airstrikes,” the report said. the bank.

Nevertheless, the Bank believes that Ukraine’s macroeconomic stability has been maintained thanks to long-term financing and the IMF program.

The European Bank for Reconstruction and Development expects Ukraine to grow by 3% next year, despite high uncertainty about the course of the conflict.

In Russia, the bank said the country’s economy contracted 2.1% last year, less than expected, and is expected to contract another 1.5% this year, according to updated forecasts.

The bank estimates that Russia has benefited from higher than expected oil revenues, thanks to the redirection of its exports to other countries to compensate for its decline in Eastern Europe, and that economic growth in Russia should therefore return to 1% next year.

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Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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