EBRD cuts growth forecast for Türkiye

The European Bank for Reconstruction and Development (EBRD) stated that it found it reasonable that the disasters would reduce Turkey’s GDP by 1 percent, and lowered its growth forecast of 3.5 percent before the earthquakes to 3 percent. The European Bank for Reconstruction and Development (EBRD) lowered its 3.5 percent growth forecast for 2023, which it announced before the earthquakes centered in Kahramanmaraş on February 6, to 3 percent, while stating that the disasters could reduce Turkey’s Gross Domestic Product (GDP) by as much as 1 percent. The two earthquakes centered in Kahramanmaraş with magnitudes of 7.7 and 7.6 that occurred late Monday morning and noon of last week caused major destruction in 10 provinces where approximately 13.4 million people live, while according to the latest information released, 35,418 people lost their lives. In its monthly report, the EBRD predicted that construction activity, which is expected to increase in the coming months in Turkey, its biggest financing country, will cushion the impact of the damage to infrastructure and supply chains, and said a 1 percent GDP contraction was a “reasonable estimate.” The EBRD said Turkey’s growing external financing needs and uncertainties over the 2023 elections also pose serious economic vulnerabilities for the country. “While the Turkish lira has lost value faster than inflation since 2015, the country’s exports have also increased, supported by low costs in US dollars,” the report said.