Turkey tipped into recession by second wave curfews

2 million Employees Praying for Survival

Source: Sayime BAŞÇI & Latif SANSÜR, sozcu.com.tr

Businesses and millions of employees who are affected by the second  wave quarantine regulations are now facing risks of starvation and bankruptcy. Sector representatives in Turkey are waiting for a new rescue package, similar to the one in Europe, to survive the curfew period.

With second wave of korona virus raging uncontrollably,  Turkey initiated lockdown measures, such as banning in door dining and service in restaurants and coffee houses. These measures are forcing two million employees to choose between their health and their career. Newly announced pandemic measures include opening time restrictions of cafes, restaurants and bars, banning dine-ins and only allowing take outs.

 

While these measures are in line with the teachings new school of “smart lockdown” adherents, unlike the huge economic rescue packages in Europe, Turkish government  provides very meagre financial aid to stricken businesses. There are approximately 400 thousand ready-to-eat food and beverage vendors in Turkey, that will on the verge of bankruptcy with new lockdown regulations.

In Europe, where governments provide rescue packages to closed businesses, reality is much different. In Germany, a 10-billion-euro budget was allocated for the second lockdown period. Also, in France, financial aid package is around 15 billion euros for the lockdown which will last a month. Thousands of restaurants and bars will also be able to benefit from financial aid packages in the UK during the lockdown. However, in Turkey, where the government does not provide a financial aid package for business during the lockdown period.  In the first wave, businesses took out loans to pay their monthly bills and are now praying for postponements of loan payments.   Many will calculate that even with loans they can survive, choosing bankruptcy proceedings.

President of Chamber of Coffee Shop owners and Tradesmen Ugur Ambarli explains, almost all coffee and tea shops in Turkey applied for business loans worth of 25 thousand Turkish Liras and now it is time for repayments. However, their plans are ruined with the coming of a second lockdown, and both owners and employees need immediate financial help. Business owners are desperately seeking for tax deferrals and repayment postponements.

In 2020, food and beverage sector shrink 70 percent and most of the restaurants are now sending their employees to leave without pay.

President of Turkey Tradesmen and Artisans Confederation, Bendevi Palandoken underlined the fact that a financial compensation is crucially needed for almost 400 thousand businesses in order them to survive the upcoming months. Palandoken stated, “During the first lockdown businesses have some money to keep paying their expenses, but the second lockdown will be tougher: we already used all our savings and we don’t have enough money to keep our businesses running.” According to Palandoken, most of the restaurants do not have the option give take out services, and even if they have, take outs can only compensate 30 percent of their average sales.

Even tough Food and Beverages sector will be affected severely, retail sector is more hopeful. Turkey Retailers Federation President Omer Duzgun explains that the negative impacts of lockdown will not be as much concerning for retail sector. Duzgun states, “Closing of restaurants and cafes will most likely increase the food demand for retailers, therefore our sales will not get hit badly as other sectors.”

 

 

In a nutshell, with one decree roughly 10% of the active workforce were robbed of heir livelihoods. Coupled with the ongoing fiscal and monetary tightening, Turkey is tipping into a deep winter recession.

 

 

Translation: Cem Cetinguc

 

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.