It’s been a pretty overwhelming week. And here we are again, off to a new one… We are literally stuck between the medical aspect and economic aspect of a pandemic.
Having finally understood the seriousness of the situation, some employers let their staff work from home. The rest, however, pushing the limits, tell their staff to continue to come to the workplace out of their concerns for losing profit. According to what I hear, it’s only just the beginning. Within a few weeks, thousands of people will get infected.
“More people die from influenza every year compared to the novel coronavirus” I must say that I don’t exactly agree with this statement. In fact, less than %1 patients who got influenza actually die from it. The mortality rate of the novel coronavirus, however, reaches 5% in some countries. Therefore, it’s just silly to agree with such approaches that deny how dangerous this virus is. Remember, social distancing avoids close contact with people. Let’s keep our distance to keep others safe.
In the meantime, international institutions are sharply revising their GDP expectations. But, they do seem confused as well since their expectations for global GDP rate varies between 0.5% and 2.0%, which is quite a large prediction interval. All these recent developments tell us that Turkey will have to compete for a GDP growth rate around 2.0-2.5%.
It’s now obvious that there will be any changes to NEP goals. But, we no longer can make calculations on the basis of 5% GDP rate goal. We should therefore prepare for the worsts and enjoy the results when things start getting better. Turkey seems unlikely to find cheap funds given the current state of CDS premiums which are nearly hitting 600. That’s why I think the recently released economic support package has been designed based on the present circumstances. Otherwise, government could have offered a package offering a larger support than 100 billion TRY.
Dollar to TRY exchange rate seems to be at a critical level as well. Although, in 2018, the duo had exceeded 7.00 during the trading times, it had closed at 6.57. Now, we are slowly approaching that level. The fact that Euro/Dollar parity has been declining causes Turkish Lira to faster depreciate against Dollar.
Although I genuinely wish this week will bring good news, rapidly increasing number of coronavirus patients forces me to lower my expectations.
