Economic and Social Indicators of the 10 Provinces* Impacted by the Earthquake

*Adana, Adıyaman, Diyarbakır, Gaziantep, Hatay, Kahramanmaraş, Kilis, Malatya, Osmaniye, Şanlıurfa 
(Posted originally in Turkish as a linked-in article on February 13, 2023)

•	According to end of 2022 figures, 15.6% of Turkey's population (13.4 million people) lives in the Region. 
•	These 10 provinces also host 1.7 million Syrians under temporary protection (49% of the total refugees). 
•	Region’s GDP was USD 75bn by the end of 2021 (9.3% of Turkey's GDP)
•	By the end of 2021, the average annual income per capita in 10 provinces was $5,559, 42% below Türkiye's average. The highest per capita income is in Gaziantep with 7,819 dollars, and the lowest in Şanlıurfa with 3,012 dollars.  
•	By the end of 2021, the Region’s loan stock was 7.9% of Türkiye’s total. 
•	As of the end of 2022, 12.4% of the total house sales in Türkiye was in the Region.   
•	According to Social Security data by the end of 2021, 9.7% of registered enterprises in Türkiye and 10.5% of employees were in the Region.
•	Within the total employees in the country, 14% of insured workers in the agricultural sector, 12% of those in the construction sector, and 11% of those in the manufacturing industry are employed in the Region.  
•	32% of those working in Country’s textile industry and 12% of workplaces are in the Region.  
•	16% of workers in chemical products, 15% in the basic metal industry, 14% in the manufacture of paper products are employed in the Region.  
•	14% of the total registered workforce and 22% of unregistered employment in Türkiye, together with the NUTS region provinces they are affiliated with (including Mersin, Bingöl, Tunceli, Elazığ) resided in the Region.  
•	Informal employment rate is 39% (end of 2021) together with the provinces in the region. Turkey average is 29%. The highest informal labor rate is 44% in Diyarbakır and Şanlıurfa.

Preliminary Analysis with Region’s Data:  

·      Region's 2007-2021 growth average of 5.1% was above the Country average of 4.9%; but there is a difference between the 2007-2015 average and the 2015-2019 average. Since 2015, the regional economy has been growing more slowly than the average of Türkiye.  

·      The weight of some sectors in the manufacturing industry is high (textile, basic metal, paper products). According to technology classification, the weight of low-technology- labor intensive sectors in the Region is higher than the average of the Country. The need for normalization in living and working conditions will be greater in some sectors than in others. Permanent migration from the region would cause the economic shock in the region to last longer than predicted. 

·      The high level of unregistered employment in the region may cause a high margin of error in calculating the loss in the economy. Similarly, the high number of Syrians under temporary protection may increase the margin of error in economic calculations.

·      It is not easy to calculate the damage to economy at this stage.  Region’s GDP is calculated as 75 billion dollars by the end of 2021.  A report by Türkonfed (2023 Kahramanmaraş Earthquake Disaster Status Report), calculated the damage to the housing stock as 71 billion dollars. For the impact on economic size, it is necessary to calculate the effect on flow (i.e. GDP), not on stock. If the regional economy shrinks by around 10 billion dollars in 2023 as this report suggests, the regional economy would contract by about 12-15%. A contraction of this rate would pull Turkey's 2023 GDP down by around 1%, keeping everything else constant. 

·      Indicators that will affect this calculation will be population, consumption and production shifts to other regions, the amount of public expenditure and total new investments (public + private) to be made in the region. Increasing public expenditures and investments will reduce the negative impact on region’s and Türkiye's GDP growth. Similarly, in the 1999 Earthquake, the shock effect on the economy subsided after a few months.  

·      Economies do not like uncertainties. Even before the earthquake, what the Turkish economy needed the most was reduction in policy uncertainty. Predictability and transparency are more crucial than ever in macroeconomic policy implementation.  

·      In order to revive the Region’s economy, the country's economy must also be strong. Therefore, reducing uncertainties at the macro level provides greater benefits than a week ago. Monetary policy uncertainties are currently the most challenging area for the financial and real sectors. If policy risk is reduced, the downward pressure on 2023 GDP growth will also ease.  

·      It is understood from the figures that the region in general benefited from the driving force of the country's growth rate between 2007 and 2015; however, it can also be seen from the figures that this dynamic weakened between 2016-2019.  

Relying on overall GDP growth rate after the earthquake may not be sufficient for the recovery of the damaged physical and human capital of the region. It may also be necessary and effective to use the local economic development dynamics and sectoral weights of the region in a way that will increase economic competitiveness. While infrastructure re-building will require national investment effort, local economic development factors should not be overlooked.