COVID-19 will hit Turkish economy hard this quarter

Outlook

Business surveys show the COVID-19 pandemic affecting the economy in April. Lockdown measures were taken and the first cases and deaths reported in mid-March. The Central Bank real sector index (for goods and services, excluding finance) shows confidence evaporating in all but one (finished goods stocks) of eight individual indices, with three-month export orders crashing from 107.9 in March to 39.6.

Turkstat’s services survey shows confidence universally down but especially three-monthly expectations of turnover demand. Expectations of suppliers’ orders from the next three months are leading retail confidence down. Construction confidence is sagging in every area surveyed, but particularly current orders. Fragile consumer confidence is below its previous low.

Impacts

• Expectations that the economic recovery under way since late 2018 would continue have been dashed.
• The impact on the economy may be greatest in April-June, moderating in July-September with positive growth again towards the year-end.
• The government has suggested lifting restrictions after Ramadan, in four weeks’ time.
• Daily rates for new virus cases and deaths are now falling, but Turkey still ranks seventh in the world for cases and twelfth for deaths.