LONDON, UNITED KINGDOM -- Output in the construction industry in Turkey was expected to increase by 3.2% in 2020, following a deep contraction of 9.2% in 2019. This growth forecast is contingent on the COVID-19 virus outbreak being contained by mid-2020. However, a downward revision of the forecast is likely if the situation worsens in the coming months, says GlobalData, a leading data and analytics company.
“Turkey's policymakers have taken steps to support the economy as the impact of the Coronavirus worsens,” said Moustafa Ali, economist at GlobalData. “There has been an easing in monetary and fiscal policy stances in Turkey, with the government and central bank seeking to reassure businesses and markets amid the escalating outbreak.”
On March 17, the Turkish central bank reduced its key interest rate by 100 basis points to 9.75% and announced measures to support lending to businesses struggling with liquidity due to the virus outbreak.
“Turkish President, Tayyip Erdogan, has announced a $15.5 billion USD fiscal stimulus package amid worsening economic conditions in Turkey,” Ali added. “The package will aim to support businesses struggling due to the virus outbreak and will include tax reliefs with VAT on domestic airlines cut from 18% to 1%. Tax payments for the hospitality, tourism and automotive sectors will be deferred for the next six months.
“The construction sector is expected to suffer as a result of the outbreak,” he went on to say. “If workers are not able to get on site, projects are likely to be halted. However, as Turkey is a net importer of oil, the sharp falls in the price of oil and other commodities are expected to support growth in the sector.”
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