The devastating earthquakes that struck Türkiye's southeast could inflict direct costs stemming from the destruction of physical structures totaling around $25 billion (TL 471.65 billion), JPMorgan said Thursday.
The costs would translate into a 2.5% growth of the domestic product, JPMorgan noted.
The magnitude 7.7 and 7.6 earthquakes struck nine hours apart in southeastern Türkiye, and severely hit northern Syria on Feb. 6, razing thousands of buildings and inflicting severe damage to infrastructure.
The death toll of the deadliest disaster in the country’s modern history was revised to over 38,000 as of Thursday, authorities said.
The quake-affected provinces are home to some 13.5 million people or 15% of Türkiye’s population. The region accounts for close to 10% of the country’s gross domestic product (GDP).
"The earthquake in Türkiye has led to a tragic loss of life and carries meaningful economic implications," economist Fatih Akçelik wrote in a note to clients.
JPMorgan also said it expected now that the central bank would cut interest rates by another 100 basis points at its meeting next week to 8%.
"The political leadership signaled further rate cuts even before the earthquake," he said. "We do not rule out more rate cuts ahead of the elections originally scheduled for June 18."
Meanwhile, the European Bank for Reconstruction and Development (EBRD) on Thursday said the quakes could cause a loss of up to 1% of the country's GDP.
The lender said this is a "reasonable estimate" because of the expected boost from reconstruction efforts later this year, which will offset the negative impact on infrastructure and supply chains.
Separately, International Monetary Fund (IMF) Executive Director Mahmoud Mohieldin has said the earthquake's impact on GDP is unlikely to be as impactful as after the 1999 earthquake in northwest Türkiye, which struck the industrial heartland.
Mohieldin added that, after the initial impact over the next few months, public and private sector investments in rebuilding could boost GDP growth going forward.
Insured losses
Catastrophe modeling firm Karen Clark & Company (KCC) said on Thursday it expects insured losses of $2.4 billion from the dual Kahramanmaraş earthquakes.
Total property losses are expected to be close to $20 billion, KCC said.
The firm's insured loss figure did not include Syria, where the disaster has compounded a humanitarian crisis caused by 12 years of war.
The earthquakes destroyed or heavily damaged over 41,000 buildings across 10 of Türkiye’s 81 provinces, according to the report.
The disaster is the largest magnitude event to occur in Türkiye since the 1939 Erzincan earthquake, the modeling firm said. The Erzincan quake killed around 33,000 people.
Economists and officials estimated the quake would cut economic growth by up to 2 percentage points this year. The government forecast growth of 5% in 2022 and had estimated growth at 5.5% in 2023 before the quake.
A recent report published by the Turkish Enterprise and Business Confederation (TÜRKONFED) put the cost of the damage at $84.1 billion – $70.8 billion from the repair of thousands of homes, $10.4 billion from loss of national income and $2.9 billion from loss of working days.
It said the main costs would rebuild housing, transmission lines and infrastructure and meet the short, medium and long-term shelter needs of the hundreds of thousands left homeless.