Turkey Economic Monitor, April 2021 : Navigating the Waves
COVID-19 (coronavirus) has taken a heavy toll on Turkey, as it has across much of the world. New estimatesof total COVID-19 cases indicate that the epidemic grew rapidly over November and into December, before a new round of restrictions were put i...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/802801619202380516/Turkey-Economic-Monitor-Navigating-the-Waves http://hdl.handle.net/10986/35497 |
| Summary: | COVID-19 (coronavirus) has taken a heavy
toll on Turkey, as it has across much of the world. New
estimatesof total COVID-19 cases indicate that the epidemic
grew rapidly over November and into December, before a new
round of restrictions were put in place to control the
spread of the virus in late December. The expansion of
COVID-19 in late 2020 followed a similar path to many
European countries. Turkey’s economic growth performance in
2020 was strong compared to other countries, but poverty
spread, and unemployment became more prevalent. Turkey’s GDP
grew by 1.8 percent in 2020, which was the fastest amongst
G20 countries in 2020 aside from China. This was on the back
of one of the strongest economic rebounds in the second half
of 2020, largely achieved in the third quarter, but with
positive growth continuing into the fourth quarter. Despite
measures to support jobs and households, labor market and
poverty outcomesnevertheless deteriorated. Indicators of
domestic demand showed some signs of economic growth cooling
early in 2021, although supply side measures such as
industrial output remainedrobust. Turkey responded to
COVID-19 with a large economic stimulus program, focused on
credit channels. In fiscal terms, Turkey’s COVID-19 stimulus
package amounted to nearly 12 percent of GDP when including
tax deferrals and contingent liabilities. This is larger
than the average for emerging market, G20 countries, and is
similar in size to the stimulus packages of the United
States, Australia and Canada. While the program utilized a
broad range of fiscal tools, uniquely amongst G20 countries,
Turkey’s support was overwhelmingly provided through the
banking sector, and was not realized as direct fiscal costs
on the budget, but ascontingent liabilities to the
government in future. Credit stimulus, loose monetary
policy, andother regulatory measures to promote credit
expansion drove a sharp increase in economicactivity in late
2020. In addition to government measures to recapitalize a
partial credit guarantee fund and state banks, policy
interest rates were maintained below inflation and a series
of financial regulatory measures introduced that
incentivized banks to increase lending activities. The
combined effect of these policies was to generate one of the
largest credit expansions that the world saw in 2020. |
|---|