Turkey could emerge stronger from coronavirus crisis, EBRD President says

By Olga Rosca
@olgarosca

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Suma Chakrabarti outlines way forward for Turkish economy and cooperation with EBRD

  • Turkey among countries to gain the most from supply chain diversification, EBRD says
  • Upgrade of Customs Union with EU would facilitate trend
  • EBRD strongly committed to Turkey, processing loans worth €1 billion in 2020 to date

Turkey could emerge stronger from the coronavirus crisis, the President of the European Bank for Reconstruction and Development (EBRD), Suma Chakrabarti, told the members of Turkey’s foreign economic relations board (DEIK) in a speech to a webinar today.

President Chakrabarti urged the Turkish private sector to seize opportunities following the Covid-19 outbreak: “One of the most important consequences of the pandemic and the disruption it has inflicted on global supply chains is much greater scrutiny of supply chains.

"In the new world we are now entering, companies will be putting considerable emphasis on resilience and diversification. Turkey, with its strong potential to significantly scale up exports, is one of the countries that stands to gain most from this new dynamic.”

An EBRD study found that of over three dozen countries where the Bank invests, Turkey has a “revealed comparative advantage” (RCA) in 189 product groups, the largest of any country in the EBRD regions.

RCA, defined as the ratio of a product’s share in a country’s total exports and the share of that product in global trade, helps measure the extent to which countries could benefit from a shift of supply chains away from China, currently the dominant global supplier.

President Chakrabarti also argued for a modernisation of the Turkey-EU Customs Union to ensure that it works better for both parties – and allows Turkey to make the most of the diversification trend.

He said: “In a world of increased regionalisation of economic activity, shortening supply chains and geopolitical uncertainty, the development of closer relationships between Turkey and the EU would benefit both parties.”

President Chakrabarti called on the Turkish authorities to address EU concerns, including internal polarisation and wider regional stability.

He also reconfirmed the EBRD’s strong commitment to Turkey, where the Bank has invested €12.4 billion over the past decade.

“We have been with you in good times and in the more challenging times of the past several years, supporting the economy after the coup attempt and now responding immediately and strongly to the needs of the Turkish corporate sector and the banking system.

“What all that means for Turkey is that we are already processing Covid-19 response projects worth some €1 billion.”

In the first five months of 2020 alone, the EBRD has channelled funds worth €870 million to the Turkish economy. A large portion was provided to the banking sector to boost lending to small and medium-sized enterprises, the backbone of the economy.

Financing also included loans to Turkish companies such as Turk Telekom, fruit producer Anadolu Etap, pulses producer Yayla, logistics firm Netlog Logistics and electricity distributor Enerjisa.

The President said the EBRD funds, policies and skills will help Turkey create new, sustainable jobs in the low-carbon economy. He urged the country to use the current situation to “tilt to green” even more boldly.

“Let’s not lose the momentum in our efforts to reduce carbon emissions and manage the long-term climate emergency.”

read the speech in full

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