2023 Turkey earthquake could cost 1% of GDP.

The European Bank for Reconstruction and Development (EBRD) has estimated that the economic effects of the earthquake in Turkey could lead to a loss of up to 1 percent of the country’s gross domestic product this year. The bank stated that this is a “reasonable estimate” due to the expected boost from reconstruction efforts later in the year, which will offset the negative impact on infrastructure and supply chains. EBRD chief economist Beata Javorcik said that the earthquake affected agricultural areas and areas with light manufacturing, so the spillover to other sectors is limited.

Growth for Turkey, the largest recipient of EBRD funds, has been revised down to 3 percent from 3.5 percent for 2023, not taking the earthquake into account. The bank noted that growing external financing requirements and political uncertainty associated with the 2023 elections create significant economic vulnerabilities. The earthquake has disrupted plans for elections to be held by June, leading to debates within President Tayyip Erdogan’s government and the opposition over a possible delay.

The report also noted that Turkey’s lira hit a record low on Wednesday, which has been beneficial for their exports due to the lower costs expressed in US dollars since 2015. By Jorgelina do Rosario