The Turkish central bank kept interest rates unchanged at 9 percent in the last two meetings after ending the easing cycle, which President Recep Tayyip Erdogan called for by cutting interest rates to less than 10 percent, despite the rise in inflation.
According to business groups and economists, the quake could cost Ankara up to $100 billion to rebuild damaged housing and infrastructure and slash economic growth this year by a percentage point or two.
And after the worst earthquake disaster to hit Turkey in decades, the economy is going through a new shock that threatens growth and will strain the budget, which ended last year with the lowest deficit in more than a decade.
The earthquake affected several provinces representing about a tenth of Turkey’s economic output, which prompted the Turkish Central Bank to provide a measure of monetary stimulus in an attempt to revive economic growth, although the interest was low compared to the high interest rates.
In a move aimed at supporting those affected by the earthquake, Turkey yesterday launched a temporary wage support program and banned layoffs in ten cities to protect employees and companies from the financial repercussions of the devastating earthquakes that hit the south of the country this month.
The Turkish Official Gazette said, on Wednesday, that companies whose headquarters were subjected to “severe or moderate damage” will benefit from the support, part of which will go to cover the wages of workers whose working hours have been reduced.
A ban on layoffs has also been imposed in 10 quake-affected areas under the state of emergency.
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