T.C.

YALOVA ÜNİVERSİTESİ
İKSİTADİ VE İDARİ BİLİMLER FAKÜLTESİ

Analysing Effects of Corona-Virus on Turkish Economy

Prepared
Fatih Emre BOYALI
160201013

Consultant
Assoc. Dr. Zelha ALTINKAYA

Yalova
June, 2020
One of the biggest economic crises of today is experiencing. The reason for this is the virus
called covid-19, which is spread from China. However, the inevitable spread of the virus
and has great effects all over the world. It especially affects the working part and large
companies. Measures taken to get rid of this pandemic; It depends on the social and
economic power, financial opportunities, health, education and science infrastructure of the
countries. Since it is not clear when this process will end, it is very difficult to calculate in
its destruction. Moreover, the impact of this crisis in all countries will not be the same.
With the drop in supply and demand, the cash flow will decrease and the resources of the
unemployed have also disappeared. While most countries provide assistance for treatment,
they also prepare for their economies that are negatively affected.

The decisions taken in this process will come back to them, either positive or negative, in
the future. so they have to do their planning well. otherwise, it may cause economic
contraction, unemployment and bankruptcies after this process. The main thing is to
survive the economic collapse without permanent damage. Staying home to avoid the virus
is the most effective way to prevent this. In addition, this situation restricted the economic
contribution of people and the demand for products without compulsory need. production
was stopped because there was no demand. The most important part is that developing
countries will be more affected in this process. because most countries are developing with
import-export. In this case, their restriction will cause great losses for the country.
Production and consumption in sectors other than health and food, which are essential,
stopped. agriculture and animal husbandry were found to be important in most countries.
Finally, the insufficiency of countries against pandemics in this epidemic caused new
discussions.

In this paper, the turkey and the world economy, which has an impact on the measures
taken in time of crisis. And there are measures to prevent such a crisis from happening
again.
As seen in the table, China, which exports the most in the world, decreases after the
corona. However, there are serious decreases in other countries and the world. The reason
for this is that the pandemic spreads rapidly and has a lethal force and originates from
China, which shows the greatest effect in China. In addition, the fact that china constitutes
a large part of world exports causes a second economic crisis worldwide. These; China's
failure to take out the products it produces creates a second crisis among countries that buy
products from China.

GLOBAL SOLUTIONS
The FED had signed an $ 8.3 billion emergency package for treatment right from the
moment the pandemic started. Fed also cut policy rates. The aim was to prevent the
slowdown and protect the economy.

The European Union has created a 25 million euro joint investment fund to combat corona.
In other countries, they have created packages or funds for their own help and treatment.

As seen in the table, the budget allocated by the countries for solution or treatment is seen
in the pandemic process. Turkey's share in this process is 2%.

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GLOBAL EFFECTS

Failure to import and export because of the corona virus of china, the second largest
economy of the world, causes certain problems.

constitutes 50% of the world in some products. China produces 60 percent of the cement in
the world, about 60 percent of nickel and 50% of steel and coal consumption. The whole
world has come to a standstill because it cannot export them. most sectors have stalled and
countries have come to an economic standstill, including China.

As most brands have suspended their activities with China, it has begun to shrink in China.
but this leads to some advantage for Turkey. most importantly, investment opportunities
have emerged. Global demand has increased as the production capacity in China has
decreased or stopped. This situation has brought Turkey to a position to invest in the
medium and long term.
But Turkey has experience serious decline in some sectors. Since we could not export
because of the pandemic, there was a 60 percent decrease especially in mining.

Also china's textile, stopping the export of fruits and vegetables could cause demand to be
converted into a turkey. Russia is planning to take these resources, especially from Turkey.

They have not been producing new vehicles with the cessation of automotive production
lately. This has led to price increases, especially in the 2nd hand car market in Turkey.
This causes a minor crisis.

As seen in the table, in the pandemic process, there are serious decreases in most countries
of the world. However, it was observed that the rise in Turkey. This product can not be
taken from other areas of the biggest reasons is due to be supplied to Turkey. It is thought
that this increase will continue after this period.

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The biggest crises in the world before the corona were trade wars between countries.
Disputes, especially between the USA and China, caused customs duties to rise and trade
to slow down. In addition, with the statements in front of the press and the power of social
media, things got worse.

According to the estimates of the IMF, economic growth in the world fell from 3.6% to
3.0% in 2019.It decreased from 2.3% to 1.7% in developed countries and from 4.5% to
3.9% in developing countries. China the contraction in the economy mainly affected the
European economy. In the European economy growth is estimated to drop from 1.8% to
1.2%. Major industrial countries, especially Germany manufacturing industry entered the
contraction zone due to the decreasing global trade.

With the global effect of the pandemic in 2020, it caused a slowdown or even a halt in
trade. Most businesses expect the china to go to a 0.5-slow down due to the virus. It is
estimated that it can reach 1 percent if it takes longer.

According to the estimates of research companies, the pandemic expects the Chinese
economy to decrease its development from 6% to 5.4%, and a 0.2% decrease globally.

Global Growth Rate

Growth Forecasts of International Institutions

As seen in the table since the pandemic, according to the estimates and the current state,
Turkey is one of the country leading to economic growth compared to the whole world.
The biggest reason may be that the virus comes to our country late and the measures we
take against pandemics. Moreover, this economic growth is expected to increase in the
coming years.

TURKEY AND COVID-19

Pre-virus Condition

While the national income was announced as 4 trillion 280 billion 381 million TL, the per
capita national income was calculated as 51 thousand 834 TL (9 thousand 127 USD).
Turkey, grew 6 percent in the last quarter of 2019, Gross Domestic Product (GDP) grew
0.9 percent in 2019.
Pre-pandemic turkey economy, GDP in 2017 to 850 million dollars, 790 billion dollars in
2018 and 2019 have been seen as 755 billion dollars. The unemployment rate was
calculated as 13.7% and 15 million out of 32 million people were found to be employed in
the service sector. CBRT's gross foreign exchange reserves increased from $ 107 billion to
$ 95 billion in March 2020.
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GDP first quarter first estimate of 2020; As the chained volume index, it increased by 4.5%
compared to the same quarter of the previous year. When the national income in terms of
dollars in the last one year was calculated as 758 billion 116 million dollars, 31 December
2019, it was calculated with the data of TÜİK, per capita income was 9 thousand 117
dollars.

As can be seen in the table, before 2020, most of the problems were caused by the
economic crisis, unemployment and politics, and by 2020, it is now seen as a pandemic
(the only problem ?!).
Turkey's dependence on china, the impact of the pandemic because it is less compared to
other countries felt less at the same rate. Also the turkey, the trade deficit with china and
other countries to live decline. With the prohibition of transportation, the number of
Chinese tourists is expected to decrease. But china is the source of a pandemic could cause
global markets to be transferred to turkey, turkey means that the cash inflow.

After covid-19 broke out in our country, some measures were taken by the government to
prevent things from getting worse.

First, a package of 100 billion TL was created.

In this package, it has provided certain aids that cannot work due to the pandemic in the
country and to prevent further damage to some companies.

These;

The tax liabilities, social security premiums and credit debts of the employers in the
service sector, which are most affected by the crisis, will be postponed.

The Credit Guarantee Fund (KGF) limit will be increased, making it easier for companies
that cannot obtain loans due to collateral problems.

A resource of 2 billion TL will be transferred to families in need.

VAT will be reduced for 3 months in domestic air transportation.

The lowest pension will be increased to 1,500 pounds.

2 months compensatory working period will be increased to 4 months.

On March 17, the CBRT cut interest rates by 100 basis points. In addition, in order to
reduce the effect of the uncertainty of the pandemic, flexibility has been provided for
banks to access TL and foreign currency. In its announcement on March 31st, the CBRT
made statements to expand its bond purchases and provide a lot and cheap liquidity.

The importance of monetary expansion increased with covid-19. According to the official
data of the CBRT, the amount of money, which was 135 billion TL on 12 April 2019,
reached 197 billion TL on 10 April 2020. With this expansionary policy, the CBRT
dropped the interest rate by 100 basis points, and the weekly repo rate was 9.75%.
The most important part is that our inability to produce economically leads to low income
and therefore unemployment, low investments, and lack of production. In short, it causes a
vicious circle.

With the addition of the pandemic on top of this, it caused more burden on a crisis. it has
increased the unemployment rate and is expected to increase further. For this reason, some
aid made by the government I mentioned above was created.

However, these aids without earning income also cause certain problems. According to the
report announced by the ministry of treasury and finance for March 2020, the budget
deficit was -30 billion TL. However, this pandemic is seen as a short-term crisis, and this
gap is expected to be overcome in the medium and long term.

In terms of tourism, the fact that our country is a touristic country constitutes a great source
of income. Around 50 thousand tourists came to our country last year and this corresponds
to 35 billion dollars of income. However, with this pandemic, the transportation was
restricted and the number of tourists decreased and this caused loss of income.

Covidien-19 outbreak miniaturize the economies of the countries in the world, Turkey is
also bound to take share from this situation. The practices made within the scope of the
measures taken with this epidemic caused a decrease in production activities.
Unemployment emerged with the decline in production and caused the decrease in gdp. In
addition, people suffering from this epidemic do not contribute economically to the
country.
As seen in the table, the sector that will be affected the most with pandemics is seen as
tourism.

With this pandemic, there have been major changes in most sectors. If we differentiate
them positively and negatively: health, food, personal care and e-commerce are on the rise.
There is a great decrease in tourism, transportation, automotive, construction and industrial
activities.

According to the table, the sectors most positively affected by the pandemic crisis were the
shopping and food sector.

The export rate of March contracted by 27 percent compared to the previous year. this
number is expected to increase to 70% in April and May. however, there is high demand in
some sectors. great increases are observed especially in hygiene products such as cologne,
disinfectant, mask, gloves. Also, the government has removed customs duties on masks
and respirators for domestic demand. Cologne consumption, which was close to 50 million
liters last year, is estimated to exceed 100 million this year. Again, while 50 thousand
masks were produced a week last year, this number increased to 1 million this year. this
situation also triggered the industry sector.
Also, the decrease in cash use increased the use of cards.

Since the pandemic process started, there has been a great increase especially in e-
commerce rate. This causes more concentration in this sector. As a result of this situation,
it is thought that there may be an increase in this sector after this process.

Measures to be taken
This process must be overcome with cooperation. so we can restore the world to its healthy
state. Firstly, necessary assistance should be provided to those who have income problems,
the necessary cash flow should be provided to tradesmen and small businesses, the
necessary support should be provided to banks, the health infrastructure should be
expanded and improved.
Non-urgent unnecessary public spending can be reduced. To stop the payments for the
airport and the bridge, to protect the banking system at all times, to help the real sector.
Improvement of the parts missing in the process and taking measures for a second wave.

CONCLUSION
As a result, in this pandemic process, people understood that they were not ready for this.
They learned that they should be prepared again in such a situation and that they learned to
overcome this process by taking lessons from the past. It has helped companies and
managers increase their experience in crisis management. In this process, countries and
central banks revised their monetary and fiscal policies. They also realized that the people
who suffered from unemployment and income shortages caused by the process could not
be provided with sufficient support. they realized that they had to resolve it as soon as
possible so that it would not be experienced again in the event of a crisis that may occur in
the coming periods. Most importantly, they understood the importance of human health
rather than economically. And to solve this crisis in the most harmless way, it should be
based on political and social reconciliation, common mind, cooperation of public
institutions and private sector. Structures of these institutions should be strengthened in
order to overcome this whole process in a clean and harmless manner. In addition, the two
most important issues are the re-coming of this pandemic as a second wave, and the other
is the danger of accumulated costs leading to a strong financial crisis.
SOURCES:
https://www.alomaliye.com/2020/05/18/covid-19un-turkiye-ekonomisi-uzerine-etkileri/

https://www.marketingturkiye.com.tr/haberler/koronavirus-turk-ekonomisini-nasil-
etkileyecek/

http://www.tuik.gov.tr/Start.do

https://www.alomaliye.com/wp-content/uploads/2020/04/turmob-covid-19-rapor-min.pdf

https://www.ticimax.com/blog/corona-virusun-ekonomiye-etkisi-ve-e-ticaretin-yukselisi

https://en.wikipedia.org/wiki/Timeline_of_the_2020_coronavirus_pandemic_in_Turkey

https://www.bbc.com/turkce/haberler-dunya-51908595

https://dergipark.org.tr/tr/download/article-file/14688

https://www.duvarenglish.com/health-2/coronavirus/2020/03/29/turkish-academics-urge-
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https://www.sde.org.tr/analysis/economic-effects-of-corona-virus-on-turkeys-economy-
analizi-16163

https://www.duvarenglish.com/opinion/2020/03/26/what-awaits-turkish-economy-amid-
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