European Bank for Reconstruction and Development provided Turkey €1.12B for COVID-19 response projects, says bank’s president
Turkey stands to benefit the most from a shift of supply chains away from China, according to the president of the European Bank for Reconstruction and Development (EBRD).
Addressing a virtual meeting held by the Foreign Economic Relations Board of Turkey (DEIK) on Wednesday, Suma Chakrabarti said that the coronavirus pandemic forced companies to put considerable emphasis on the resilience and diversification of their supply chains.
“They will have to do so to survive, to recover, to flourish,” he added.
Stating that the EBRD regions have the potential to significantly scale up their exports, Chakrabarti said: “Indeed, Turkey is one of the countries which stands to gain most from this new dynamic.”
Turkey has the highest number of product groups – some 189 – enjoying good “revealed comparative advantage,” he said.
Revealed comparative advantage (RCA) is the ratio of a product’s share in a country’s total exports and the share of that product in global trade.
“There is clearly scope here for trade diversion, particularly as Turkey has a significant delivery deadline advantage over the Far East,” Chakrabarti added.
In light of this, he called on the EU to upgrade its Customs Union agreement with Turkey, a goal long sought by Ankara.
“In a world of increased regionalization of economic activity, shortening supply chains and geopolitical uncertainty, the development of closer relationships between Turkey and the EU would benefit both parties,” he argued.
Serious challenge
Chakrabarti underlined that the coronavirus pandemic is the most serious challenge the EBRD regions have ever faced.
“The pandemic hit Turkey at a difficult time. The economy was recovering from the 2018 volatility of the lira [currency] quite well but remained fragile,” he said.
Touching on the bank’s €21 billion ($23.5 billion) COVID 19 Solidarity Package, Chakrabarti said the EBRD is committed to all activities to cushion the impact of the pandemic and support economic recovery.
The bank provided some €1 billion ($1.12 billion) to Turkey’s banks and companies operating in the infrastructure, industry, commerce, agribusiness, and energy sectors for COVID-19 response projects, he highlighted.
“And on top of the financial support we will be providing advice on policy reforms that assist governments and benefit the private sector,” Chakrabarti said.
With investments of €12.6 billion (some $14.2 billion) through nearly 320 projects over the past 11 years, Turkey is the top destination for the bank’s finance, he stressed.
“For four years in a row Turkey was our largest country of operations and it is still the one where we achieve the highest transition impact,” Chakrabarti said, adding that ties between Turkey and the EBRD “will grow even closer.”
Calling Turkey pivotal in linking East and West thanks to its location and its knowledge and successful experience of transition, Chakrabarti said the bank’s experience in the country was a major factor in success in the Southern and Eastern Mediterranean.
Turkey never so important as now
Also speaking at the meeting Nail Olpak, head of the Foreign Economic Relations Board of Turkey, highlighted that as Turkey is at the meeting point of two worlds, it is a melting pot of cultures, industrial hub, and key gateway between East and West.
“But it has never been more important than now. The upheaval caused by the ongoing pandemic has highlighted the fragility of the global economy and the supply chains on which it depends,” Olpak said.
Saying that recovery from the coronavirus crisis will take a long time, Olpak added that it will also require strong partnerships such as between Turkey and the EBRD.
Olpak said Turkey offers advantages of production quality and has policymakers keen to improve the country’s investment environment.
Turkey’s action plans rely on long-term sustainable economic growth and so all the economic reform programs are based on boosting production, R&D, and exports, he said.
“Undoubtedly, we will see more cooperation between the EBRD and Turkish manufacturers in this process of transformation of global production and investment activities,” said Olpak.
He stressed that access to direct, cost-effective finance will be of utmost importance for both producers and investors.
Ebru Ozdemir, a DEIK board member, said there is an unprecedented opportunity to leverage this crisis to create a more resilient world.
“I am also deeply optimistic about how Turkey will emerge from this global pandemic,” she said.
Turkish companies are stepping into some of the gaps in global supply chains as a result of the COVID-19 crisis, Ozdemir noted.
“We often talk about Turkey’s crucial role in European trade and investments, but today we are seeing its importance as a member of the entire global economic community,” she explained.