WHAT AN EPIDEMIC TEACHES : A LOOK TO THE FUTURE WITH COVID-19 INDICATORS 

All analyses, expectations and prepared plans for 2020 have lost their meaning with the corona virus outbreak.

Although all the world's economies and the Turkish economy have experienced various and multidimensional crises in the past, for the first time they are experiencing a major economic problem in which the fear of death is decisive and is not caused by the internal dynamics of the economy.

The global epidemic has hit World Trade due to transport disruptions , logistical woes, travel restrictions and cash crunch. And, of course, this pandemic crisis, which deeply affects the entire world, affects Turkey.

The process, which begins with the deterioration of the global supply chain and evolves into an all-out quarantine environment with the increasing number of cases, will create very, very large costs. For the economic crisis that arises in this process, it can be expected that the demand shock will be more effective than the supply shock. Because the withdrawal of people from the markets due to the fact that staying at home is the most accurate method of preventing the epidemic has almost ended the demand for goods and services that are outside of mandatory needs. Because there is no demand left, production processes have also stopped or come to a standstill. The possibility of a financial shock (crisis) followed by demand and supply shocks also stands strong.

For this reason, it is necessary to try to interpret the process from as wide a framework as possible and think a few times before taking a step. Because no element of the economic world, especially the factories that are decommissioning production and the households that are moving away from consumption, continues its normal life, or rather cannot. This, on the other hand, means that economic activity is strongly affected.

Because in this process, production decreased, investment fell off the agenda, and as a result of these developments, total demand also weakened. Stopping production leads to unemployment, which leads to an automatic decrease in disposable income, that is, to the disappearance of demand. It seems inevitable that the parameter that will be affected in the next stage will be savings. Although no definitive analyses have been conducted, it is generally accepted that the economic effects of the outbreak can be very profound. The contribution of people caught in the epidemic to the economy is being lost. Due to the measures, more than 50% of the population is withdrawn from all production and consumption activities. This is disrupting the supply side, as well as leading to a large contraction in demand.

As the epidemic reached a global dimension, liquidity preference in the financial sector came to the fore as in every crisis. Efforts to cash in and increase liquidity by hard selling financial assets in international markets are notable.

The effects of this epidemic from international markets and the reflection of measures taken in the domestic market in financial markets will potentially be in the form of deterioration. The central bank's stepped-up bond purchases would raise interest rates by triggering risk increases rather than lowering them. Exchange rates will tend to rise due to the balance of payments and the Central Bank's monetary expansion, interest rate cuts and a decrease in its reserves. Capital controls may be raised if the Reserve decrease continues, capital outflows and cash foreign currency withdrawals occur inside.

It is clear that the corona virus epidemic will cause significant damage to economies, causing economies to fall into recession or even shrink, increasing unemployment, poverty and bankruptcies. Because some of the negativity in the economy is due to the measures taken to prevent the epidemic. These measures, staying at home and not going to work, not traveling, not taking holidays and the like, because employees do not produce goods and services, consumers do not consume the consequences. Both lead to declining economic activity and economic stagnation. Especially if you do not have the savings and reserves to deal with such a crisis, the balance sheet becomes even heavier. But if we call it human first and we call it saving lives first, it's inevitable. It is important to be able to overcome the economic contraction that will occur in this way, without causing permanent damage with the control of the epidemic.

In the process, an environment of extremely abundant liquidity and low interest rates stands out as a beautiful jumping-off point for emerging economies. The broad financial conditions that exist at a time when investment and risk appetites will be revived from the yen are an important opportunity for countries like us.

Euler Hermes estimates that the loss of coronovirus in the global trade in goods and services could reach $ 320 billion per quarter. Export losses due to slowing demand from China and Europe are expected to reach $ 161 billion at the end of April. Global tourism losses of $ 125 billion and transportation losses of $ 33 billion are projected. Because of the epidemic, there are sectors that will indirectly increase their growth or will not experience deviations in their expectations. These include services and products such as pharmaceuticals, medical products, small appliances, cleaning and hygiene products, digital education.

Besides, it's unclear how long the outbreak will last. It could take weeks. It could take years for us to get back to normal. But it is obvious that there will be significant changes to the current order. The plague epidemic brought the end of the Inquisition, according to some, is the idea that the coronovirus will bring the end of capitalism.

In the days of Korono and beyond , digitalization, innovation and design will be more important than ever. It seems essential that new business models are developed and implemented. In other words, the pandemic will create its own economy with the crisis it has created for the world and cause the global value chains to be divided into smaller parts . Eggs will no longer be put in the same basket, social distance will envelop the entire world, and each individual will rediscover himself and begin the empathy journey of countries at the macro level and families at the micro level.

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