The recent 7.8-magnitude earthquake that shook regions of southern Turkey and northern Syria significantly affected the nation’s economy and caused a steep decline in the stock market. The incident has caused Turkey’s stock market to fall 15% in just three days. On Wednesday, the main index of Istanbul’s stock exchange fell by 7%, temporarily stopping trading. Two circuit breakers were put in place by the exchange in an effort to restore stability, but the panic selling persisted.
This tragic incident occurs as Turkey is already dealing with numerous economic challenges. Consumer prices in the nation are now 57.7% higher than they were in the same month last year, signaling severe inflation. The country’s economic problems have been made worse by President Recep Tayyip Erdogan’s unconventional economic policies. Despite the fact that global inflation is harming economies all over the world, Turkey’s central bank lowered interest rates, which led to an increase in price. The country’s economy is expected to increase by 2.7% this year, down from 4.7% in 2022, according to the World Bank.
Turkey’s financial problems, which the nation was already dealing with, have been made worse by the earthquake. An already frail economy has been made worse by the stock market’s 15% decline in the three days following the earthquake. Over 9,500 people were killed in the 7.8-magnitude earthquake, which was the deadliest to strike Turkey since 1939 and left a path of devastation in its wake. A number of economic problems, including soaring consumer price inflation that peaked at 85.5% in October 2021 and has since fallen back to 57.7% in January 2023, were plaguing Turkey at the time the tragedy struck.
Despite the fact that President Recep Tayyip Erdogan’s divisive economic policies have only made the problem worse, Turkey’s economy is not immune to the effects of global inflation. Turkey’s central bank has reduced interest rates as prices have risen, in contrast to other nations that have raised rates to fight inflation. The World Bank thus forecasted that Turkey’s economy would expand by only 2.7% this year, down from 4.7% in 2022.
As a result of the earthquake, many structures in Turkey’s already troubled real estate market are now uninhabitable and in need of renovation or reconstruction. This will then have a big effect on the nation’s construction industry, which has recently been a vital driver of Turkey’s economic growth.
As a result of the quake’s damage to and temporary closure of ports and roadways, trade and transportation have also been hampered, preventing the free flow of products and services. Trade and transportation disruptions would probably have a ripple impact on other economic sectors, especially tourism, which is Turkey’s main source of income.
The recent earthquake in Turkey has severely hurt a nation whose economy was already in trouble. The country’s financial crisis has only become worse as a result of the abrupt stock market sell-off, real estate damage, and trade and transportation delays.