Turkish economic response to devastating earthquakes begins: Stephen Done

It reported that the physical devastation wrought by the natural disaster caused US$34bn of damage to the country, with more than 173,000 buildings being heavily damaged or having collapsed, with the total cost equating to around 4 per cent of Turkey’s 2021 economic output.

In response to the quake, the Turkish Central Bank cut its main interest rate by 0.5 per cent to 8.5 per cent, with the move marking a resumption of the series of interest cuts begun in 2022, despite the most recent annual inflation rate in January standing at 57.68 per cent.

Turkey’s monetary policy focuses on the pursuit of growth and export competition, rather than soothing inflation as seen in developed countries.

The Central Bank stated in a press release that the move was aiming to create a supportive financial environment for the continuation of growth momentum in industrial production and the extension of positive trends in employment.

It also cited international recession risks and indications of the easing of cost pressures across the Turkish economy, as part of its rationale for the decision.

The UK’s biggest supermarkets have become the latest to ration the purchase of some fruits and vegetables, which follows the egg shortages experienced in the previous few weeks. In response, environment secretary Thérèse Coffey was booed by farmers during a National Farmers’ Union conference; they have accused the government of ignoring the growing

disruption to supply chains around the UK and Europe. Further challenges were also made by farmers regarding a range of problems linked to Brexit and high inflation.

Fruit shortages have been caused by bad weather in southern Europe and north Africa, with below freezing temperatures affecting the source of most salad vegetables sold in the winter in the UK. These shortages have been compounded by a drop in production in the UK and the Netherlands outside peak season due to soaring energy costs, with energy prices rising almost 79 per cent. The UK production of salad ingredients is expected to fall to the lowest levels since records began in 1985.

The poultry industry is also struggling in the UK, with egg production falling to its lowest level in nine years, with a billion fewer eggs expected to be produced in 2022 compared to 2019. This is due to a combination of events: animal feed costs are up 57 per cent; extensive labour shortages; and the outbreak of avian flu which has led to poultry stock being kept indoors under a controlled lockdown and leading to the culling of thousands of birds.

The National Farmers Union is calling for ministers to promote domestic food production and prioritise British farmers during trade deals with the EU.

Stephen Done is a member of the Investment Research Team at Redmayne Bentley