Ankara, Turkey – The crisis caused by the outbreak of the new type of coronavirus (Covid-19) has brought the world economy to the brink, while China, where the outbreak occurred, has the potential to accelerate its rise by increasing its share in the global economy, and Turkey’s exports have further increased.
The crisis caused by the outbreak of the new type of coronavirus (Covid-19) has brought the world economy to the brink, while China, where the outbreak occurred, has the potential to accelerate its rise by increasing its share in the global economy, and Turkey’s exports have further increased.
Threatening human health as well as economies, Covid-19 caused a collapse in economies not seen since World War II.
Production has come to a standstill at factories in many countries, while some retail companies have had to close their stores. Around 500 million jobs were lost in a few weeks worldwide.
Although the economic collapse was felt in almost every country’s economy, what made the collapse unique was that the decline in growth differed by country.
Covid-19 breaks down the unofficial hierarchy in the global economy, while economies such as China stand out as the relative “winners” of the crisis, while European Union (EU) economies stand out as the “losers”.
China is projected to increase its Sunday share in global economic output by about 9 percent from 2019 to 2021, according to research by Zurich-based investment bank UBS.
The EU is expected to lose its share of the global economy by 3.5 per cent between 2019 and 2021 due to the Covid-19 crisis.
The major economies in the Union have suffered 2 times the collapse of Germany, the engine of the region’s economy, while the losses for the EU could be even greater if Germany is not in relatively good shape.
Besides the EU, the losers include Russia and the UK, which is fighting Brexit alongside Covid-19. Russia’s share of global economic output is forecast to decline by 5.7 percent and Britain’s by 5 percent.
South Korea and Turkey are among the winning countries. The United States, the world’s largest economy, will maintain that position roughly next year.
The organization for Economic Cooperation and Development (OECD) estimates that next year the size of the U.S. economy will remain at 2019 levels, while China will have a 10 percent broader economy.
China, as well as other Southeast Asian countries, are economically better off from the Covid-19 crisis because of their experience of the epidemic. In these countries, which have learned from epidemics such as MERS and SARS, collective prosperity is seen as more valuable than individual freedoms. For this reason, the countries in question have an advantage in the crisis.
It is also noted that the fact that manufacturing has a greater share of GDP in the economies of China and South Korea than other major countries has given these countries an advantage in the crisis.
Even without the Covid-19 crisis, it is estimated that China’s share of the global economy will increase thanks to its high growth, while it is emphasized that the health crisis has further accelerated China’s rise.
It is noted that this acceleration has occurred both in terms of China’s economic dominance in Asia and in the process of capturing other major economies. Responding to criticism from Western countries on Covid-19, China has prepared 5-year programs to increase its high technology and self-sufficiency after the outbreak.
On the other hand, it is worth noting that the Eurozone is increasingly lagging behind. Economies such as Italy, Spain and France, in particular, are suffering sudden losses and over-borrowing from the first wave of coronavirus, raising concerns about the future of the Eurozone.
Spain, which has been hit hard by the Covid-19 outbreak, ranks 2nd after India among the major economies experiencing the deepest recession worldwide due to the outbreak, in UBS’s research. On the same list, France is 5th and Italy is 8th.
It is worth noting that Germany, which has the largest economy in the eurozone, survived the Covid-19 crisis better than other European countries. Germany’s long-term steady growth over the past 10 years, reducing the ratio of public debt to GDP from 80 per cent to 60 per cent, and its surplus budget; it is noted that it is prepared for the Covid-19 crisis. The experience of the 2008 financial crisis, Chancellor Angela Merkel, the country with strong institutions and functioning exist, Covid-19th the German economy to be less dependent on the service sector most affected by the crisis, the weight of the industrial sector, the state government economically and politically powerful is the fact that also in Germany, more light to get through the crisis than other countries in the region will help.
Differences in countries ‘ economic growth during the Covid-19 crisis reveal the impact of the length and depth of measures taken to prevent the spread of the epidemic on economies. The duration of the measures also affects the extent of the recession in the economy. This does not mean that” measures have caused serious damage to the economy in general”.
Countries such as Vietnam and South Korea, which implemented strict quarantine measures at the beginning of the first wave of the outbreak, stand out as the countries that have best survived the crisis so far. Although these countries experienced a serious economic collapse at first, this did not last long, and the collapse was followed by a strong recovery.
However, it is worth noting that late quarantine measures are less effective in places with a high number of Covid-19 cases, such as the United States and the United Kingdom.
Even in countries such as Sweden, which did not take strict measures, a severe economic recession was seen as many people voluntarily moved away from economic activities.
Some economists note that the epidemic will make economies less globalized, less equal, and more digitized.
Economists expect manufacturers to bring their output closer to their core hubs, with office workers continuing to work from home for part of the week, and the epidemic leaving the low-wage sector in the service sector facing long periods of unemployment.
Research shows that countries with larger manufacturing sectors experienced fewer losses during the Covid-19 crisis. This is because” factories are easier to keep open under social distance than shops, restaurants or hotels.”
It is noted that governments ‘ crisis management has been effective in success, while governments in many developed countries have implemented very comprehensive aid and rescue programs that have mitigated the economic impact of the epidemic.
Timo Wollmershaeuser, director of research and Economic Forecasting at the Economic Research institute (Ifo), noted that the global covid-19 shock hit everyone, but the differences in countries ‘ growth rates are greater than ever.
“Fiscal policy measures will play a bigger role next year,” Wollmershaeuser said, noting that bailout and economic stimulus programs are relatively insignificant in terms of the depth of the collapse this year. In the second wave, government support for the economy is more important. Because many companies will have exhausted their reserves. Countries that can then resolutely counter this with large government aid programs will have a clear advantage., “he said.
Timo Wollmershaeuser stressed that differences in the world economy will again be significant in the second wave of the outbreak, noting that China’s weight in the global economy will change even more if the Covid-19 virus continues to spread relatively little in Asia and these countries do not experience another crisis.
Gabriel Felbermayr, President of the Institute of World Economics in Kiel, also pointed out that the Chinese economy, which has seen growth of around 6 percent in recent years, will maintain its growth trend, albeit limited, despite the crisis.
Erdal Yalcin, professor of International Economics at the University of Konstanz, said that the outbreak will have a strong impact on future international trade flows in all countries.
Emphasizing that Turkey is a country with the potential to emerge from the crisis in question by increasing its exports more in the next 10 years, Yalcin said that there are reasons to support this expectation.
“Given the experience experienced during the Covid-19 period, EU countries and manufacturers will certainly try to reduce dependence on imports from China and East Asian countries. Turkey already has an economy well integrated into the value chains of European multinationals. The logistics link with the leading EU countries has been developed, which allows for a rapid exchange of goods between Turkey and EU countries decisively., “he said.
Drawing attention to the advantage of Turkey’s cost factor, Yalcin said: “the depreciation of the Turkish lira pressures domestic Turkish companies with external debt. The weak Turkish lira will have a positive impact on Turkey’s competitiveness in terms of low labor costs in the long term. Turkey’s attractiveness, especially for EU companies, is likely to increase due to lower costs.” said.
Erdal Yalcin stated that Turkey has a large, reliable, well-educated labor force and said, “Turkey has a large population with young and well-educated people. Especially for international companies from the EU, this makes Turkey a reliable and interesting place to produce goods for the EU market.” said.
Turkey’s Covid-19 crisis, especially in the export sector, there is no doubt that it can come out stronger Yalçın stressed that some conditions should be provided for this.
Yalcin pointed out that the political relations between Turkey and the EU should become more stable, and said that if the problems in the political relations between the EU and Turkey cannot be resolved, the second potentials mentioned in exports are less likely to be realized.