PodcastWorld Bank projects that COVID-19 could push 1.2 million Turks into poverty in 2020
The World Bank has released a report on Turkey saying that the country's economy is projected to face a difficult 2020, including a projected increase in poverty. "Important sectors in the Turkish economy are highly vulnerable to COVID-linked economic strains, which could further lower employment, reduce labor force participation, and increase the poor population by 1.2 million in 2020," the report said.
Duvar English
The World Bank has released a report to analyze the economic impact of COVID-19 in Turkey. The report released on Aug. 11 said that the pandemic could push an additional 1.2 million people under the poverty line in Turkey in 2020.
Turkish economy 'to shrink by 40 percent if COVID-19 outbreak lasts one year'“According to our simulation results, 1.4 million people who were not poor before the pandemic could fall into poverty. The policy measures of the government could push around 200 thousand poor people out of poverty. Thus, increasing the number of poor by 1.2 million people in 2020,” the report said.
TheCOVID-19 shock will have a serious impact on the households’welfare in Turkey, particularly the poor and vulnerable, according tothe report. “The shock to household incomes could increase Turkey’spoverty rate from 10.4 to 14.4 percent, but the government’songoing policy 11 response would likely decrease the poverty ratesignificantly from 14.4 percent to 11.8 percent,” the report said.
Construction and services are the sectors most affected from the COVID-19 pandemic, and the new poor are mainly employed in those sectors, according to the report. Around half of the main breadwinners of the new poor households are employed in the services sector, the report said.
Economist Eğilmez: Turkish economy is no longer predictable“Another32 percent of breadwinners earn their income from the constructionsector. Both the services and the construction sectors tend to hirelow-skilled workers without social security protection.”
The Turkish economy is projected to contract by 3.8 percent in 2020 in the baseline scenario, the report said. "Like other emerging market economies impacted by the crisis, Turkey will likely experience a decline in potential output, which is estimated to have fallen below 4 percent in 2019 - its lowest level in 15 years."
Though short-term external debt obligations seem manageable, a growing current account deficit and the sharp decline in reserves have heightened external vulnerabilities, the report said.