Turkey has been on the top-ten list of COVID-19 cases for nearly a month. By 9 May 2020, the number of confirmed cases has almost reached 140,000, with a confirmed COVID-19 related loss of nearly 3,800 lives. The country’s fast-rising infection rate is partly a reflection of Turkey’s increased testing capacity, with more than 1.3 million tests carried out in total by 9 May.
The COVID-19 tableau of Turkey vis-à-vis a large number of countries is presented in Figure 1, which shows total confirmed cases and confirmed deaths on a log scale. Both panels in Figure 1 paint a dire picture early on in terms of the speed of spread but then shows strong signs of improvement in the later weeks.
Figure 1 COVID-19 summary information for Turkey (as of 9 May 2020)
Comparing the spread of COVID-19 in different countries comes with its own difficulties. The number of confirmed cases depends on levels of testing, and higher numbers may merely reflect a larger testing capacity. The number of confirmed deaths appear to be more straightforward; however, it suffers from heterogeneity in how each country reports the cause of death.
In Turkey, the very low COVID-19-related death rate (44 per million population as of 9 May) became a source of controversy both in the highly polarised domestic environment and abroad. Authorities were accused of being non-transparent when İstanbul – the heart of production in the country – was reported to have 36% more COVID-19-related deaths (Wu et al. 2020). Later, however, it was seen that many other countries were no different than Turkey in this respect. Indeed, disturbingly high death rates were reported in 17 countries, reaching 65% in the UK, for example.
Balta and Özel (2020) argue that the so-called non-transparency problem with the COVID-19 numbers in Turkey is an over-simplification – one that would have been frowned upon in normal circumstances – of a complex interaction of negative externalities:
1. Turkey entered this crisis with one of the highest numbers of ICU beds in Europe, thanks to the privatisation of healthcare services. Normally, this would seem like mis-investment for a country with a relatively young population.
2. Concentration of healthcare services in Turkey’s metropolises – a symbol of unequal access to healthcare – has worked well for managing this crisis since these large cities were the epicentres of COVID-19 in the country.
3. Turkish physicians who normally work under extreme stress for long hours became another asset for the government to manage this crisis.
4. Flexibility of treatment protocols – questionable in terms of future side effects – let Turkish doctors use aggressive treatments much earlier than their Western counterparts.
Implementing containment measures is a key response to a medical shock. The Turkish response to the COVID-19 crisis was rated 80.4 out of a possible 100 (as of 9 May) in the stringency index published by the Oxford COVID-19 Government Response Tracker.
A summary of the major measures taken against COVID-19 by the Turkish government is summarised in Figure 2. The government started with installing thermal cameras in major airports in the last weeks of January. Turkey was admittedly slow to stop flights from Iran (the pandemic’s second global epicentre); however, it gave a speedy response to stop flights to and from China (3 February), followed by successive flight bans with other high-risk countries. The 14-day quarantine for international travellers was introduced on 11 March, when the first confirmed case was announced. More than 5,000 teams of two or three medics were charged with contact tracing in the meantime.
Figure 2 Timeline of COVID-19 containment measures in Turkey
Note: Author’s illustration using data from Oxford COVID-19 Government Response Tracker, more on https://www.bsg.ox.ac.uk/research/research-projects/coronavirus-government-response-tracker
Social distancing measures took effect around mid-March, much earlier than in many Western countries. Schools were closed; mass prayers were suspended; restaurants, cafés, and sports and cultural facilities halted their activities; all large events were cancelled. A work-from-home order was issued for non-essential civil servants.
Travel was restricted. Borders were closed on 27 March to all but returning citizens, intercity buses and trains were halted, and domestic flights were limited. No entry or exit was allowed for the residents of 31 large cities.
In its lockdown arrangement, Turkey adopted an age-related partial curfew. Non-essential movement of people over 65 and under 20 years of age was banned. There were no bans on the movement of the working-age population, reflecting the government’s priority to not halt production in the country. Later, a total curfew over weekends and national holidays was put in place, in mid-April.
These age-specific measures did not prevent the fast spread of the disease; however, they played an important role in not overburdening the healthcare system. Indeed, the cultural taboo against putting the elderly in nursing homes and the total curfew for people over 65 (while helping them with their everyday needs using an army of social workers and volunteers) have contributed immensely to the lower death rates in Turkey. The government, in essence, adopted a ‘class immunity’ strategy in the midst of an already hostile economic environment following the recession of 2018.
Immediate effects on industrial production
The containment measures are expected to have unavoidable consequences for production and trade. Therefore, to measure the real-time production effects of the COVID-19 crisis in Turkey, I look at electricity demand. This choice was inspired by McWilliams and Zachmann (2020), whose starting point is the fact that much economic activity is reliant on the use of electricity. This holds true for Turkey, as can be seen in Figure 3, which illustrates the monthly industrial electricity consumption and industrial production. The two series have a correlation coefficient of 0.82.
Figure 3 Industrial electricity consumption and industrial production in Turkey
Note: Author’s illustration using data from TurkStat and EPDK Monthly Electricity Report of Turkey
The Bruegel electricity tracker provided by McWilliams and Zachmann (2020) does not include Turkey yet. Therefore, I calculated the daily electricity consumption using their methodology except for the temperature adjustment. I also looked at peak-hour consumption (08:00-18:00) because most economic activity would typically happen in this period. Weekends and public holidays were disregarded. Finally, each week in 2020 was aligned with the corresponding week in 2019. Figure 4 illustrates the change in daily peak-time electricity consumption during the COVID-19 crisis compared to 2019.
The decline in production right after the containment measures started taking effect is obvious in the figure. The lowest point was reached in mid-April, indicating that production dropped to 74% of 2019 levels. Afterwards, there was a recovery period in the second half of April extending to early May. Indeed, by 7 May, production in 2020 has bumped up to 92% of that in 2019.
Figure 4 Change in daily peak-time electricity consumption
Note: Author’s calculations using data from TEİAŞ. Peak-hour (8:00 - 18:00) consumption on corresponding working days in 2019 and 2020 from TEİAŞ are compared.
Similar to findings of Acemoğlu et al. (2020), the strict and long lockdown for people aged above 65 years in Turkey both reduced infection/death rates and enabled less strict containment measures for the lower-risk groups. This, in turn, seemed to help reduce a contraction in production that could have been much worse with a uniform lockdown policy. The major brunt of the health crisis in terms of its human costs was borne by the working-class.
The monthly change of the capacity utilisation rate (Figure 5) shows this situation from a sectoral perspective. Almost all manufacturing sectors contracted, but some were hit harder than others.
Figure 5 Capacity utilisation rate, April 2020 (monthly change)
Note: Author’s illustration using data from TurkStat
Capacity utilisation of textiles, apparel, leather, motor vehicles, and furniture declined more than 40% in April compared to March. Any decline in the activity of these key sectors is particularly important because these are among the largest and the most export-intensive sectors in Turkey. The main culprit for the large contractions is the anaemic, almost non-existent demand. For people trapped in their homes, buying textiles, apparel, shoes, furniture, or cars should have seemed meaningless.
On the supply side, there are at least two explanations for the decline in industrial production. First, in the initial days of the containment measures, plants got quarantined for 14-days even if just one worker was reported to have contracted COVID-19. However, there was considerable heterogeneity among manufacturing firms in terms of reporting infections to the authorities. Some reported the COVID-19 cases if there were any. Some got caught through contact-tracing practices; yet some flew under the radar and eluded the quarantine.
Second, producers had a hard time procuring their intermediate inputs. Figure 6 illustrates the domestic backward linkages in production in Turkey. Orange, blue, and red signify agriculture, manufacturing, and service sectors, respectively. The size of a bubble shows the production share of the sector. The weight of connections reflects the strength of domestic backward linkages. As can be observed, the backward linkages within manufacturing are particularly strong in Turkey, as in many other countries. Therefore, the impact of the containment measures was not only felt by the quarantined plant but also by its downstream customers.
Figure 6 Domestic linkages of production
Notes: The domestic use of intermediate inputs in sectoral production are obtained from the most recent (2012) Input-Output tables of Turkey. The size of a bubble shows the production share of the sector. The weight of connections reflects the strength of domestic backward linkages. Graphic by Alkım Karakurt.
The Turkish economy had not recovered from the adverse effects of the 2018 recession when the COVID-19 crisis started to shake the world economy from its foundations. Increasingly bleak economic-growth forecasts started pouring out from major international organisations; that an unprecedented economic downturn since the Great Depression was imminent seemed to be the common message.
In early May, the European Commission (2020) lowered its 2020 economic growth figures for the world economy to -3.5% and the EU economy to -7.2%. For Turkey, the figure was -5.4%. Depending upon the scenario, these numbers fluctuate significantly across different institutions and studies for Turkey.
The level or growth rate of industrial production in Turkey in the medium run will likely be in the same predicament. The forecasts will be determined especially by two factors: production linkages and timing, and the modus of the lifting of containment measures.
Taymaz (2020), in his scenario analysis using Turkish input-output tables, predicts the highest declines in accommodation and restaurants, air transport, retail, textiles, and motor vehicles manufacturing. This is in line with Figure 5 above.
One of his noteworthy conclusions is that the service sectors in Turkey will be disproportionally hard-hit by the COVID-19 containment measures. This is also hinted in Figure 6 that shows backward linkages for service sectors as well. Weak demand is the main explanation, however; the production networks is at least as important. Therefore, any forecast in regards to the medium-run behaviour of production in Turkey has to account for both domestic and international value chains.
Similar to other countries whose authorities believe that infections have already peaked, Turkey has recently announced a gradual lifting of containment measures. As both Turkey and its international production partners lift their COVID-19-related restrictions, production will soar to satisfy the appetite of shopping-deprived customers. Add to that the unrestricted access to previous value chains and we will certainly see a boom of production in the short-run.
However, neither the timing nor the modus of removing containment measures are fail-safe. Should policy mistakes give rise to a second wave of COVID-19 – a medical shock with its cascading effects – what happens to production in the medium run in Turkey remains ambiguous.
Acemoglu, D, V Chernozhukov, I Werning and M D Whinston (2020), “A multi-risk SIR model with optimally targeted lockdown”, NBER Working Paper w27102.
Balta, Evren, and Soli Özel (2020), “The battle over the numbers: Turkey’s low case fatality rate”, Institut Montaigne, blog post, 4 May.
European Commission (2020), “European economic forecast: Spring 2020”.
McWilliams, Ben, and Georg Zachmann (2020), “COVID-19 crisis: Electricity demand as a real-time indicator”, Bruegel, blog post, 25 March.
Taymaz, Erol (2020), “COVID-19 tedbirlerinin Türkiye ekonomisine etkisi ve çözüm önerileri”, Sarkaç, blog post, 8 April.
Wu, Jin, Allison McCann, Josh Katz and Elian Peltier (2020), “63,000 missing deaths: Tracking the true toll of the coronavirus outbreak”, The New York Times, 21 April, updated 12 May.