Before the natural disaster, leading indicators have been pointing to a stronger domestic demand compared to foreign demand as well as an increase in the growth trend in the first quarter of 2023, it said.

The Turkish central bank (TCMB) recently decided to reduce the policy rate (one-week repo auction rate) from 9 per cent to 8.5 per cent. While the earthquake is expected to affect economic activity in the near term, it is anticipated that it will not have a permanent impact on performance of the Turkish economy in the medium term, TCMB said.

Although recently released data points to a stronger economic activity than anticipated, recession concerns in developed economies as a result of ongoing geopolitical risks and interest rate hikes continue.

While the negative consequences of supply constraints in some sectors, particularly basic food, have been alleviated by the strategic solutions facilitated by the government, the high level in producer and consumer inflation continues on an international scale, the central bank said in a release.

The impact of the earthquake on production, consumption, employment and expectations is being extensively evaluated, the bank said.

Fibre2Fashion News Desk (DS)