How can the earthquake affect Azerbaijan-Türkiye economic relations?-Expert opinion

How can the earthquake affect Azerbaijan-Türkiye economic relations?-Expert opinion
# 15 February 2023 17:49 (UTC +04:00)

The relations between Azerbaijan and Türkiye are at a high level in all fields. Of course cooperation in the economic sphere is the foundation of these relations. It is many years that economic relations between Azerbaijan and Türkiye have developed in an ascending line. The volume of trade turnover of the two countries gives a reason to say this. Thus, the total trade turnover of Azerbaijan made up USD 52 bln. 686.5 mln. in 2022. Türkiye ranked second after Italy (34.4%) in terms of trade volume with Azerbaijan. Thus the volume of trade turnover with the fraternal country was USD 5 bln. 842 mln. in 2022. Türkiye ranks second among the main countries in the export of non-oil products. In 2022, the export of non-oil products in Azerbaijan made up USD 3 bln. 47.7 mln. which is 23.4 % or USD 713 mln. 704 thousand falls on the share of Türkiye. Also, the volume of Azerbaijan’s imports from Türkiye made up USD 2 bln. 297 mln. which made up 15.8% of the total imports of our country. The mentioned figures show that besides being an indispensable political partner of Azerbaijan, Türkiye is also an important economic partner.

A devastating quake occurred on February 6 in Türkiye, which has a significant role in world economy, raising an important question about what change it will cause in the world economy. And how will the emerging situation influence in Azerbaijan- Türkiye relations?

Economist-expert Khalid Karimli told APA-Economics that according to the calculations of Bloomberg, the volume of the damage inflicted by the quake in Türkiye is about USD 85 bln. It was announced that 6 544 buildings completely destroyed, and nearly 25 thousand buildings were damaged. The territory is of great importance for the economy of Türkiye, as devastated areas are 10 percent of the Turkish economy.

Therefore, Khalid Karimli believes that since the relations of the companies located in that area are not at a high level with Azerbaijan, it is not expected a negative impact on the mutual trade relations of the two countries: "Although textiles and various construction materials are mainly produced in that region, exports are made to the Middle Eastern countries. 20 billion dollars were exported from that area during the year. The recovery of this export figure will increase the financial burden of the Turkish government. However, the funds that will be invested in the construction during the restoration process will lead to a revival in these areas. I don't think that these ongoing processes will have a negative impact on the import-export operations between Azerbaijan and the fraternal country."

Economist-expert Elman Sadigov told "APA-Economics" that the initial impact of the natural disaster on Türkiye may be an increase in inflation in the coming months: "The main price increase is possible in building materials. The major infrastructure projects, construction of roads, and buildings in the affected areas will require a large amount of funding. Will the Turkish economy be able to cope with these issues on its own? Time will tell. Remember that the more time stretches, the more additional costs will increase. Expenses related to social benefits, financial support of the affected people, housing rebuilding, and other issues may increase."

Elman Sadigov said issuing the additional lira and foreign aid can be one of the ways out of the current situation: "Foreign aid accounts for a small part of the damage caused. The rapprochement process with Greece and the transition of cooperation with Israel to the next stage should be considered.

"Türkiye is one of the important developing countries. If it fails to get out of this burden and its economy suffers a lot of damage, it can lead to serious problems for other developing countries as well. That is, if a crisis occurs, this crisis may be contagious. In any case, international organizations should help the fraternal country. In my opinion, despite the worries and risks, Türkiye will be able to get out of this situation," Elman Sadigov added.

As for the impact of natural disasters on Azerbaijan, and the participation of Turkish companies in the restoration and reconstruction works in Karabakh, the expert stressed that Turkish companies will continue to fulfill their obligations. Because the construction materials for usage are being provided from Azerbaijan. He stressed that the main concern was about the Baku-Tbilisi-Ceyhan oil pipeline. The loading of oil at the Ceyhan terminal has already been resumed.

Azerbaijani MP, economist Vugar Bayramov told APA-Economics that there is an increase in trade turnover of Türkiye with Azerbaijan compared to previous years: “Türkiye is the second largest partner of Azerbaijan in the export of non-oil products. Our expectation is that Türkiye will be able to pass this ordeal.

Generally, taking note of the structure of trade turnover between the two countries, 75% of our exported products are energy products. Energy products are those that are transported on the basis of contracts and existing infrastructure. In particular, an increase in the share of gas fuel is observed. Also, the President of the fraternal country Recep Tayyip Erdogan said that within the next 1 year, areas affected by natural disasters will be reconstructed and put into use. In general, it is not predicted that there will be any serious changes in the Turkish-Azerbaijani economic relations after the earthquake."

Note that two earthquakes of magnitude 7.7 and 7.6 occurred in Türkiye's Kahramanmaraş region on February 6, causing serious destruction and loss of life in Kahramanmaraş, Hatay, Osmaniye, Adıyaman, Gaziantep, Şanlıurfa, Diyarbakır, Malatya, Kilis and Adana. 13.5 million people which is 16% of the total population live in the 10 provinces in the earthquake area.
According to the latest information, 35,418 people died and 105,505 were injured as a result of the natural disaster. Azerbaijani citizens are among the dead and injured.

Shukran Mammadov