What impact will the strong earthquake in Turkey have on the country and the world economy?

　　China News Service, February 7th (Zhongxin Finance Gong Hongyu) On February 6, local time, southern Turkey and northern Syria were hit by a strong earthquake, and the two countries reported serious casualties and property losses.

　　Turkish Vice President Fuad Oktay said on the 6th that the strong earthquake that occurred in southern Turkey that day has caused 2,379 deaths and 14,483 injuries in the country.

Rescuers have pulled 7,840 people from the rubble.

　　Turkey straddles the Eurasian continent and connects the Black Sea and the Mediterranean Sea. It is not only a romantic tourist destination, but the Turkish Strait is also known as the "throat of the world" because of its unique and important geographical location.

　　Located in a global shipping hub, what impact will the earthquake in Turkey have on the country and the global economy and financial markets?

On February 6, local time, in Diyarbakir, Turkey, local houses and buildings collapsed in the earthquake.

Turkish currency and stock market tumble

　　The strong earthquake shook Turkey's financial markets.

According to Reuters news on the 6th, in early trading on the 6th, the Turkish currency lira once fell to a record low of 18.85, and then recovered the lost ground and closed flat.

The stock market also suffered a sharp drop, with the Istanbul Stock Exchange 100 index falling more than 5% at one point.

　　In fact, long before the earthquake, Turkey's financial market was not optimistic, and in the past period of time, the situation of "stocks, bonds and foreign exchange" falling together has been staged many times.

　　On January 5, 2023, Turkey's Istanbul 100 index plunged more than 5% intraday, triggering a circuit breaker.

After 30 minutes of resuming trading, the stock index continued to plummet and triggered a second circuit breaker.

At the close of the day, the index fell 7.4%, the largest drop in 10 months.

On the same day, the price of Turkish government bonds also fell sharply, and the yield of 10-year government bonds soared by more than 22%, the largest increase in history.

　　In terms of exchange rate, in 2022, the exchange rate of the lira against the US dollar will plummet from 13.31 at the beginning of the year to around 18.70, with a depreciation rate of up to 40%.

　　The depreciation of the lira has also pushed up inflation in Turkey.

In October 2022, Turkey's inflation rate will reach 85.51%, the highest level in 24 years.

In that month, Turkey's transportation prices, including energy prices, rose by 117% year-on-year; food prices rose by 99%, ranking second; and furniture and other household items rose by 93.63%.

On February 6, local time, in Adana, Turkey, rescuers searched and rescued among the rubble.

What impact will the earthquake have on the world economy?

　　In the eyes of many analysts, the earthquake undoubtedly aggravated the crisis facing Turkey's economy and finance.

　　A report by the U.S. Geological Survey stated that the earthquake could cause widespread damage, with economic losses estimated at 2 percent of Turkey's gross domestic product (GDP).

　　According to foreign media reports, a natural gas pipeline in Hatay Province in southern Turkey exploded and caught fire on the 6th.

In addition, the Syrian Ministry of Oil said on the 6th that due to equipment damage caused by the strong earthquake, the largest Syrian oil refinery in Baniyas City has suspended operations.

　　As of the close on the 6th, the price of light crude oil futures delivered on the New York Mercantile Exchange in March closed at US$74.11 a barrel, an increase of 0.98%; the price of London Brent crude oil futures delivered in April closed at US$80.99 a barrel, The increase was 1.31%.

　　"The earthquake will affect Turkey's normal production and life, and the impact on Turkey's industrial chain and supply chain will exacerbate Turkey's currency depreciation and inflation." Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce, accepted Zhongxin Finance pointed out during the interview.

　　At the same time, the earthquake will also cause losses to the recovering Turkish tourism industry.

According to the latest data released by the Turkish Ministry of Culture and Tourism, Turkey will receive over 51.4 million tourists in 2022. Compared with 2019 before the epidemic, the number of tourists received has recovered by about 99%, making it the third largest tourism market in the world.

　　However, the current earthquake has caused the destruction of thousands of buildings in Turkey.

Among them, a thousand-year-old castle in Gaziantep, a UNESCO World Heritage Site, collapsed.

　　Bai Ming said that Turkey is located between the Black Sea and the Mediterranean Sea, and the Bosporus Strait in the middle is an important waterway for world freight. The earthquake will undoubtedly bring more uncertainty to the normal navigation of the Strait.

　　In Bai Ming’s view, in the context of the conflict between Russia and Ukraine, the Bosporus Strait close to Russia and Ukraine undertakes the important function of transporting food and natural gas to Europe.

The uncertainty faced by the Straits may affect the price trend of bulk commodities and the stable operation of the international industrial chain and supply chain.

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