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Economic Causes and Consequences of the 2023 Türkiye Earthquake

Updated: Sep 13, 2023

By Petyo Rakov


The most severe and deadliest earthquake to strike Türkiye and Syria in the last 80 years occurred at the beginning of 2023. Apart from the tragic effects on the lives of millions of people, the earthquake severely crippled the already-struggling Turkish economy, with the true scale of damages still developing. Additionally, the severity of the disaster was exacerbated by ‘man-made’ failures that should serve as lessons for the future.


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The Tragedy


On 6 February 2023, a devastating 7.8 magnitude earthquake struck the Turkish region of Kahramanmaras, near the Syrian border. Additionally, the earthquake was followed by thousands of aftershocks with the most detrimental one reaching a magnitude of 7.6 and the most recent one happening on 20 February.


As of 20 February 2023, the number of casualties in Türkiye surpasses 41,000 people, while the combined death toll in the two states is estimated to be around 48,000 people. These statistics alone make the tragedy the strongest and deadliest that Türkiye experienced in the past 80 years.

However, the full impact of the disaster is yet to be estimated in both countries due to country-specific impediments. In Türkiye, the affected area is similar to the size of Germany, while in Syria, part of the affected area is an active conflict zone, held by rebels and restricted by the central government.


Türkiye’s ‘Construction Amnesty’ Regulation

Regardless of uncertainties, the Turkish Ministry of Environment and Urbanization stated that at least 105,794 Turkish buildings have either collapsed, been severely damaged, or require immediate demolition. This number caused fierce political discussions in the earthquake-prone country because the widespread lack of compliance with building regulations most likely severely ‘contributed’ to the aftermath of the disaster.


According to a report of the Turkish Ministry of Environment, Urbanization and Climate, at least 294,165 illegal buildings have been regularised in the ten affected provincial capitals after 2018 by the last so-called ‘construction amnesty’. For a certain fee, this law granted a construction certificate for more than 5,8 million residential units that did not comply with the updated 2017 zoning legislation and safety standards that emphasise the use of strong materials.


Proponents of the law argue its necessity by claiming that as a result of increased migration from rural areas to cities, the demand for housing has grown, and consequently, housing production has accelerated, in the last two decades. However, the loose enforcement of quality control de facto resulted in ‘amnesties’ to unlicensed building contractors where disaster risk is highest.


For example, as a result of the law, the resistance of the registered buildings is left to the responsibility of the building contractor. This practice conflicts with the law’s purpose of reducing disaster risks. According to the Turkish Statistical Institute, 51 per cent of the citizens in the affected provinces lived in so-called earthquake-resistant buildings, built after 2001.


‘Soft’ Storeys


Another factor which could have led to the large-scale destruction of towns is a design failure, known as ‘soft storey failure’. This is a practice, in which wide-open spaces on the ground floor for, among others, car parking spaces or unobstructed commercial leasing are constructed.


The overhanging apartments are usually insufficiently supported, solely by disconnected columns. This makes the buildings vulnerable to earthquakes since it is divided into two sections regarding structural behaviour. Despite these safety hazards, these buildings are typical for the Middle East because they offer a solution to overcrowding in densely-populated areas.


Moreover, in the past, soft-storey buildings have led to large-scale destruction. The 1999 Izmit earthquake with a 7.6 magnitude led to the death of at least 17,000 people. Additionally, an analysis concluded that between 85 and 90 per cent of the collapsed and damaged buildings had soft storeys.


The process of reinforcing a soft-storey building, by changing its structure, after its initial construction and occupation is called retrofitting. The World Bank has preemptively identified the need for retrofitting almost seven million residential buildings across Türkiye with an estimated cost of 456 billion dollars (426.4 billion euros).


The same report concludes that public funding mechanisms to support resilient retrofitting or reconstruction of housing at risk are not sufficient to meet the massive financing needs since by December 2021 only about four per cent of these buildings were transformed to be earthquake-resilient.


Economic Impact


As of 21 February 2023, it is not possible to calculate the final bill of this disaster because the humanitarian relief efforts are still unfolding in the affected areas. However, reports on the magnitudes of certain costs are already compiled and can serve as an educated foundation for estimations.


The World Health Organization (WHO) estimates that around 26 million people across both countries need humanitarian assistance. Additionally, the WHO has launched a 43 million dollars (40.3 million euros) appeal to support the earthquake response in Syria and Türkiye, expected to at least double over the following couple of days.


In addition, the World Bank agreed to provide 1.78 billion dollars (1.67 billion euros) as initial support for recovery and reconstruction efforts in Türkiye. This example is followed by a plethora of countries that provided, among others, search and rescue teams and financial aid.


According to one estimate, the total cost of the destruction will range between ten billion dollars (9.4 billion euros) and 84 billion dollars (78.8 billion euros) which is roughly between 1.2-10 per cent of Türkiye’s annual GDP. The government will incur additional costs in the form of relief support for the living expenses of the victims such as food, temporary accommodation, heating, medical treatment and others. So far, the government in Ankara has allocated slightly more than five billion euros in disaster relief.


Economically, 2022 was a challenging year for Türkiye since the country was unable to redeem foreign currency debts and pay the bills for imported goods. Consequently, the sovereign credit ratings, an assessment of a country’s creditworthiness, were the lowest they had been in twenty years. Lastly, the Turkish economy was expected to grow by about three per cent in 2023.


However, since the affected region is a highly-integrated economic area, the earthquake will be negatively impacted with a possible loss of up to two-and-half per cent of economic growth, according to the European Bank for Reconstruction and Development (EBRD). The degree of the drop depends on the temporary decrease in employment levels and the rate of recovery timewise. Türkiye’s GDP will most likely only grow at a rate of around one per cent in 2023, resulting in a decline in the national income per capita since the population naturally increases by one-and-a-half per cent.


Conclusion


The 2023 earthquake in Türkiye affected the lives of millions of people in both Türkiye and Syria, highlighting the hazardous consequences of insufficiently-enforced construction regulations. Furthermore, the collateral damages, expressed in the unprecedented death toll and destruction, scarred the already-struggling Turkish economy, in particular in eastern Türkiye.


In addition, on 20 February, the Turkish province of Hatay was hit again by another devastating earthquake with a magnitude of 6.4. This will most likely cause additional billions of euros worth of destruction damage. The coming months will showcase the full extent of the disaster, economic damage, and the country’s ability to recover, assisted by international humanitarian aid.



Sources: Euronews, Voanews, CNN, DW, News Civil Engineer, World Bank, World Health Organization


Written by Petyo Rakov

February 2023

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