Preliminary reports estimate the 6 February earthquakes will cost the Turkish economy more than $50 billion, Reuters reported on Friday.
The rise in the costs of food and housing as a result of the damage from the quakes will mean the inflation rate in the country will fall by less than previously predicted. Rising construction costs will also present difficulties, the unnamed government official said.
Inflation will also remain above 40 per cent as the country heads towards elections, which must take place no later than 18 June. An additional budget will need to be drafted to reallocate resources after the devastating quakes, a government official and four economists have said.
The expectation in the country had been that inflation would fall to around 35-40 per cent by June, from a high of 85 per cent in October, but new forecasts have the rate only dropping to 42-46 per cent by the time of the elections.
The mass exodus of people from the earthquake-hit areas in Turkey will drive up the price of rent in the other provinces, said the economists. The price of food will also increase as the affected areas accounted for 16 per cent of the country’s agricultural production last year.
The government official also said that the earthquakes will disrupt the current budget plans, as the maximum amount that can be borrowed in the 2023 budget will no longer be enough.
“Completing the year with the current budget does not seem easy. An additional budget will be needed,” the official said.