Forecasting the Adverse Effects of Foreign and Domestic Economic Developments Caused by the COVID-19 Pandemic on Turkey: Suggesting Alternative Policy Packages to Eliminate These Effects

In the project, empirically revealing the short and long-term negative effects of the COVID-19 pandemic on the Turkish economy, caused by the negative developments in the outside world and in Turkey; It is aimed to develop alternative policy package proposals on the basis of empirical analysis in order to reduce and eliminate the negative effects that may arise. It has been observed that the economic shrinkage resulting from the effect of the pandemic is higher than expected. However, the cost of full closure in the second quarter was lower than expected. It has been revealed that the short-term effect of the compensation policies applied is far from compensating the economic contraction. The occurrence of long-term effects as expected depends on many assumptions. Some of these are the use of all the compensation transfers transferred in accordance with their targets, the non-conflict of alternative policy instruments, and the realization of the economic triggers and activities expected from the transfers. In addition, it should not be forgotten that in the medium-long term, for example, the repayment of all kinds of loans will begin before the economic effects of the pandemic are eliminated. It has been observed that direct transfers to the workforce are the most effective policy in terms of income generation. The effects of sectoral and household loans were more limited. It has been understood that the main priority of compensatory policies should be the protection of employment, the prevention of business bankruptcies and social support programs spread over a wide base. It was thought that the continuation of high-efficiency measures and perhaps the shifting of ineffective policy tools to others could have a positive effect. The sectors that will provide growth and expected employment increase have emerged as the rubber and plastic products sector and the basic metals sector.