Economic loss may reach TRY 500bn

A full damage assessment is needed in the first place to estimate the economic loss caused by the Pazarcik Earthquake. We will have to wait for a while and see the big picture correctly for this. Today, only rough calculations and comparisons can be made based on experiences such as the Gulf Earthquake in 1999. This is what we will try to do.

The Pazarcik Earthquake affected 10 provinces. The total share of these provinces in Turkey’s national income is close to 10%. Turkey’s GDP is expected to be around TRY 15tr in 2022. Nearly 10% of this, in other words, TRY 1.5tr is produced in these 10 provinces. This figure will certainly be slightly higher for the current year.

Many businesses were directly damaged. However, employees of those, which are not physically harmed, will not be able to come to work for a while. So, returning to fulltime production will take time. Roughly assuming a loss of one month, it can be estimated that there will be a production loss of TRY 100bn to TRY 125bn. Damage losses also need to be calculated separately. The number of destroyed buildings exceeded 20,000 when this article was written. This number will increase. Earthquake scientists consider moderately and heavily damaged buildings to have collapsed. It is estimated that around 40,000 buildings will be lost.

The cost of replacing these buildings can also be roughly calculated. Dozens of qualified structures such as airport runways and hospitals will need to be rebuilt or repaired. Infrastructure like roads and gas pipes were also damaged and will create additional costs.

If we only consider the buildings, a 70 to 80 million square-meter construction cost can be reached assuming 40,000 buildings with an average 2,000 square-meter construction area each. Considering that the cost will be

TRY 3,000 per square meter, up to TRY 240bn will have to be spent for construction. A cost of TRY 400bn is reached for the loss of production and the reconstruction and repair of the buildings, according to these estimates. This cost does not include response expenditures due to earthquakes, health expenditures, or loss of belongings and equipment in homes, offices, and workplaces. Therefore, the actual cost will probably reach around TRY 500bn, corresponding to approximately USD 26bn. But these numbers may remain too optimistic. Export disruptions (total exports of the provinces of the region are close to USD 20bn) insurance expenditures and job losses should be added as cost items.

The cost of the Marmara Earthquake (1999) was close to USD 400bn in today’s figures. Analyses are showing that it reduced the growth of Turkey’s national product by one point, according to a report by the CBi Turkey Platform, which was established by UNDP and Turkish Enterprise and Business Confederation (TURKONFED).