Question

Read the topic below, and then write a essay about it. Word limit: at least 600 words.
topic:
In our lessons, important turning points are mentioned by emphasizing on both domestic and international factors. What are the domestic and international factors that affected the Turkish Economy in the first half of 2020? What will be the long term affects of these factors?

Answer 1

Turkey economy expanded by 0.6% QoQ in first three months of 2020 compared to 1.9% QoQ expansion in the prior quarter. This is despite a series of adverse shocks including severe geo-political tensions at the southeastern border and an averted coup attempt in 2016.GDP is expected to shrink this year amid the Covid-19 pandemic. Exports and tourism are likely to suffer the most and weaken the country’s external position. Lockdown related measures should limit economic activity at home. While fiscal stimulus could soften the impact somewhat. However, a recession looks unavoidable.

CPI inflation in Turkey increased from 10.9% YoY in April 2020 to 11.4% YoY in May 2020. Inflation is expected to follow a downward trajectory given weak consumption spending and low income levels amid ongoing COVID-19 pandemic.

The Central Bank stood pat at its 25 June meeting and kept the one-week repo rate at 8.25% - the lowest level since before the country’s 2018 currency crisis.

Consumer confidence rose to 62.6 in June from May's 59.5. June's result marked the best performance since April 2019. As such, the index moved closer to the 100-threshold which separates pessimism from optimism among consumers.

Turkey’s current account deficit widened markedly from USD 0.5 bn in April 2019 to USD 5.1 bn in April 2020. The print marked the fifth consecutive monthly shortfall and the largest deficit in just under two years.

International factors: Coronavirus pandemic, global slowdown, trade restrictions, fluctuating oil prices and exchange rate

Domestic factors: Geopolitical tensions at the south-eastern border, coup attempt, coronavirus related lockdown measures

Long term effect: Economy is likely to remain in recession in 2020. Some recovery is expected in 2021 in lines with global recovery and depending upon the vaccination of coronvirus.