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http://journals.tubitak.gov.tr/medical/
Turkish Journal of Medical Sciences
Turk J Med Sci
(2021) 51: 3182-3193
© TÜBİTAK
doi:10.3906/sag-2106-271
Short-term impact of the Covid-19 pandemic on the global and Turkish economy 
Ömer AÇIKGÖZ*, Aslı GÜNAY
Department of Economics, Faculty of Political Science, Social Sciences University of Ankara, Ankara, Turkey
* Correspondence: omeracikgoz63@gmail.com
1. Introduction
The Covid-19 pandemic, a new strain discovered in China 
in December 2019, has killed millions of people and 
transformed the world forever. It is a historic event since it is 
not just a health issue; it also has global economic, political, 
and social dimensions. As of August 2021, the virus had 
infected more than 205 million people worldwide, resulting 
in around 4.3 million deaths, and more than 2.4 billion 
vaccine doses have been administered globally [1]. Besides, 
the International Monetary Fund (IMF) indicates that the 
global economy was experiencing its worst crisis with a 3.5% 
global gross domestic product (GDP) fall in 2020 since the 
Great Depression of the 1930s [2, 3] compared to an estimated 
15% GDP decline in between 1929 and 1932 worldwide [4]. 
While output in the United States (US) declined by 3.5%, 
the economy contracted by 6.7% and 4.7% in the euro area 
and Japan, respectively, in 2020. The pandemic is estimated 
to have pushed 119–124 million people into poverty in 2020 
due to the global economic recession [5].
Many scientific comparisons have been drawn between 
the Covid-19 pandemic and preceding pandemics 
(Spanish flu, Asian flu, Hong Kong flu, and swine flu) 
[6] to demonstrate the magnitude of mortality rate and 
economic collapse caused by the Covid-19 pandemic. 
However, considering their worldwide dissemination, 
nature, intensity, and socioeconomic characteristics, 
drawing comparisons between them can be difficult. The 
mortality impact of the Covid-19 pandemic, for example, 
will be less than the Spanish flu that is estimated to have 
killed roughly 40 million people globally in 1918 [7, 
8]. Furthermore, despite the lack of economic data for 
analyzing the economic impact of the Spanish flu, it is 
estimated that GDP and consumption fell by 6% and 8% in 
the typical country, respectively, and that many businesses, 
particularly those in the service and entertainment 
industries, suffered significant amount losses in revenue 
[8, 9]. On the other hand, existing studies show that the 
global death number of the Asian flu in 1957 and the Hong 
Background/aim: The Covid-19 pandemic is one of those rare events that affects everyone on earth and changes our lives. The pandemic, 
which has killed over four million people worldwide, is putting unprecedented pressure on governments to maintain essential health 
and social services, as well as keep their economies running, even as the virus threatens people’s daily life on every level. Thus, the 
purpose of this study is to discuss the short-term economic impact of the pandemic by assessing its costs using official economic data for 
both the world and Turkey. Furthermore, this research highlights possible economic, social, and political pathways for a postpandemic 
new world.
Materials and methods: This study is a review article that overviews and tracks the economic development of the Covid-19 pandemic 
from the start, synthesizes and compares current data of reliable institutions, and provides an overall assessment.
Results: The pandemic has certainly caused short-term and long-term damage to economies and living standards for many people. 
Although there are estimates on what this damage is, the exact degree of the damage is still unknown. However, it seems that the 
recovery will be gradual, long-lasting, and unpredictable due to the unprecedented uncertainty characteristic of the pandemic.
Conclusion: Early economic growth projections show that there will be no ordinary recovery for the world economy since short-term 
countries’ recovery paths are different. It is likely to remain uneven and depend on the effectiveness of the vaccination process, fiscal 
policy support, public health management, and hard-hit sectors’ growth size in economies. Due to the uncertainty and lack of confidence, 
governments should ensure an equal and sustainable economic recovery from the Covid-19 pandemic by conducting flexible monetary 
and fiscal policies. However, without structural reforms, economies can not boost either in the short-term and long-term.
Key words: Covid-19, economy, pandemic, Turkey, world
Received: 22.06.2021              Accepted/Published Online: 07.08.2021              Final Version: 17.12.2021
Review Article
This work is licensed under a Creative Commons Attribution 4.0 International License.
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Kong flu in 1968 was around one million people. Moreover, 
both pandemics had no significant worldwide economic 
impact [10, 11]. As a result, early indications suggest that 
the Covid-19 pandemic will have a similar global impact 
with the Spanish flu rather than others in the end.
Covid-19 pandemic is a global crisis, and all countries 
have been affected by this crisis. Developed as well as 
emerging and developing countries are experiencing a 
recession. Countries whose economies substantially rely 
on tourism and hospitality, travel, and entertainment 
sector have been particularly hard hit. For example, the 
global GDP loss from the pandemic crisis could be around 
9 trillion dollars over 2020 and 2021, greater than the 
economies of Japan and Germany combined [2]. Moreover, 
with inferior health systems, smaller fiscal support, and 
high debt levels, both emerging and developing countries 
and low-income countries have faced extra challenges for 
recovery from that noticeable recession.
At the beginning of the Covid-19 pandemic, global 
uncertainty was at an all-time high, and it continues to be 
so. Although global economic and policy uncertainty has 
decreased by about 60% since the onset of the Covid-19 
pandemic in the first quarter of 2020, the World Uncertainty 
Index (WUI) shows that it is still about 50% higher than 
its historical average from 1996 to 2010 [12]. Hence, the 
Covid-19 pandemic’s uncertainty is unprecedented since 
there is a great deal of uncertainty about almost every 
aspect of the Covid-19 crisis [11]. These are labeled as the 
virus’ infectiousness and lethality [13], the time required 
to develop and deploy effective vaccines [14], the duration 
of social isolation [15, 16], macroeconomic consequences, 
and government policy responses in both the short-term 
and long-term [17], the shifts in consumer spending 
patterns, travel, logistics, new business and working 
formation [18, 19]. This situation suggests that the global 
economy will not recover regularly; in other words, the 
time it takes for each country to recover will most likely 
vary due to the effectiveness of the vaccination process 
and public health care measurements implemented by 
each country. For example, according to the Organisation 
for Economic Co-operation and Development (OECD), 
much of Europe will take nearly three years, whereas 
Korea and the US are likely to recover to prepandemic per 
capita income levels in roughly 18 months [3]. As a result, 
the most confusing impact of the Covid-19 pandemic 
on society, economics, and policies is unprecedented 
uncertainty since how the pandemic will evolve and end 
is still ambiguous. 
The Covid-19 crisis demonstrates that governments, 
not markets, are the ones that provide much-needed help 
during the global economic recession. In other words, 
the Covid-19 pandemic has led to a collapse of the free 
market phenomena, indicating markets are the only 
solution mechanism for practically every problem that 
societies encounter since 1981. Nevertheless, the Covid-19 
pandemic has promoted the governments’ intervention 
rather than the market intervention. Almost every major 
industry has sought financial aid from the government 
during the pandemic. Moreover, small enterprises have 
been pleading for zero-interest loans, tax cuts, and outright 
cash.  As a result, the Covid-19 pandemic has demonstrated 
that markets alone cannot recover economies in this global 
crisis, and more market and government collaboration will 
most likely be new economic policy in the postpandemic 
world [20].
Already existing disparities and gaps in health and 
social protection systems between countries have been 
severely revealed, and in many cases worsened, by the 
Covid-19 pandemic. Countries with strong health and 
social protection systems responded better to the crisis by 
guaranteeing access to health care services, also providing 
jobs and income security for the neediest, such as informal 
workers, daily wage earners, self-employed workers, 
migrants, and the homeless. Countries that do not have 
robust health and social protection systems, on the other 
hand, have required international assistance to enable an 
adequate initial reaction to the pandemic. In this respect, 
the Covid-19 pandemic presents a chance for countries to 
prioritize investments in their health and social protection 
systems and develop them to better deal with future crises 
[21].
Population mental health has deteriorated significantly 
since the start of the Covid-19 pandemic. The OECD 
shows that rates of anxiety and depression increased 
in 2020 compared to previous years [22]. Economic 
insecurity, unemployment, lower-income, death fear, 
domestic violence, mobility restrictions, media exposure 
about the pandemic, and social isolation have been the 
main factors that has led to an unprecedented worsening 
of population mental health during the Covid-19 
pandemic [22, 23]. Due to these risk factors, loneliness 
and individualism are likely to have associated with the 
pandemic [24]. As individuals are isolated from social life, 
they have begun to behave more individually than before. 
People have started to form their own living spaces for 
conducting their socioeconomic lives based on personal 
freedoms with the accelerated digitalization in all areas of 
life. Hence, populations’ social well-being, and their social 
life and relationships have worsened noticeably during 
the pandemic. Despite the new positive developments like 
vaccines, many are still wondering how the postpandemic 
world will be like.
Governments face formidable difficulties in their 
efforts to safeguard their citizens from the threat of the 
Covid-19 pandemic. It is recognized that society’s regular 
functioning cannot be maintained, particularly in light 
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of the virus’s primary protective measurement, namely 
confinement. Furthermore, it is acknowledged that the 
imposed measurements will invariably intrude on rights 
and freedoms that are an essential feature of a democratic 
society ruled by law [25]. Countries have no choice but 
to take extraordinary steps to overcome the pandemic’s 
unusual situation and save lives, like extensive lockdowns 
enacted to slow virus transmission and restrict freedom 
of movement. Such policies may have an unintended 
impact on people’s lives and security, and access to health 
care, food, water, sanitation, work, education, and leisure 
[26]. Furthermore, more security measures may damage 
democratic principles and fundamental human rights in 
communities and countries [6]. As a result, the Covid-19 
pandemic might lead to a rise in authoritarianism at the 
global level. 
Our daily lives have forever changed by the Covid-19 
pandemic and the resulting economic crisis.  One of the 
most notable developments has been the acceleration of the 
movement to digital payments, as customers avoided using 
cash for fear of spreading the virus, and retailers responded 
by moving their operations online. For example, in 2019, 
the overall number of noncash payments in the euro area 
climbed by 81% to €98 billion from €90.7 billion in 2018, 
and card payments accounted for 48% of total noncash 
payments in the euro area in 2019 [27]. In total, the global 
digital payments industry hit more than $4.7 trillion value 
in 2019 and increased to $5.4 trillion value in 2020, almost 
a 16% rise compared with the previous year. The entire 
sector is expected to continue its impressive growth in 
2021, with over $6.6 trillion transaction value. According 
to the growth rates in 2020, while Europe was the leading 
digital payments market with the 28.3% growth rate to 
$1.17 trillion compared to 2019, the US market follows 
with $1.26 trillion worth of digital payments, 22.6% more 
than the previous year1.
Moreover, a cryptocurrency based on blockchain 
technology, such as Bitcoin and Ethereum, has gained 
popularity and traction worldwide as a faster and 
cheaper way to transmit money across borders during the 
pandemic. Notably, demand for Bitcoin has been surging 
globally since the beginning of the Covid-19 pandemic. 
Despite a significant drop in its value in recent months, 
the value of Bitcoin increased by more than 300% in 20202. 
Today, especially emerging economies, are increasingly 
turning to cryptocurrencies to help them recover from the 
1 CPA Practice Advisor (2021). Digital Payments to Hit $6.6 Trillion in 2021, a 40% Jump in Two Years [online]. Website https://www.cpapracticeadvisor.
com/accounting-audit/news/21208440/digital-payments-to-hit-66-trillion-in-2021-a-40-jump-in-two-years [accessed 19 June 2021].
2 Bitcoin.com (2021). Bitcoin Price [online]. Website https://markets.bitcoin.com/crypto/BTC  [accessed 10 June 2021].
3 Oxford Business Group (2021). Economic News [online]. Website https://oxfordbusinessgroup.com/news/can-cryptocurrencies-drive-covid-19-
recovery-emerging-markets [accessed 10 June 2021].
4 CNBC (2021). The Fed this summer will take another step in developing a digital currency [online]. Website https://www.cnbc.com/2021/05/20/the-
fed-this-summer-will-take-another-step-ahead-in-developing-a-digital-currency.html [accessed 11 June 2021].
pandemic’s adverse economic impacts3. On the other hand, 
central bank digital currency (CBDC) and stablecoins have 
received more attention recently. According to the Bank 
for International Settlements (BIS) survey, more than 
85% of central banks are studying or investigating CBDC; 
however, many of issuances have yet to be completed [28]. 
For example, China, the European Central Bank (ECB) 
and the Federal Reserve are working to build CBDC4 [29]. 
In contrast to the CBDC, stablecoins are private entities 
designed to maintain a steady value concerning another 
asset like a unit of currency and commodity or a basket 
of assets, unlike cryptocurrencies [30]. Even though 
the pandemic has highlighted the importance of digital 
financial services, digital currencies have raised concerns 
about consumer protection, data privacy, potential 
cybersecurity risks, disrupting bank lending, and erasing 
local liquidity from bank deposits [31].
Countries have used big data to combat the 
Covid-19 pandemic, which enhanced the effectiveness 
of their efforts in pandemic monitoring, virus tracking, 
prevention, control, and treatment, as well as resource 
allocation [32]. However, while using big data to fight the 
Covid-19 pandemic may improve health care services and 
their performance, it might also raise other issues related 
to personal data protection. Before the pandemic, the use 
of personal data by governments without the permission 
of individuals was a point of debate; however, it has now 
become a focal point for human rights violations with the 
pandemic’s severe measurements.
In line with the situations and discussions mentioned 
above, it is crucial to study the impact of the Covid-19 
pandemic on the world and Turkish economies, mainly 
because of its massive destruction in all areas. While many 
studies have examined the global economic consequences 
of the Covid-19 pandemic [33, 34, and 35], some of them 
investigated the only Turkish economy [36, 37, and 38]. 
Furthermore, this research might be viewed as an updated 
version of our previous work, which examined only the 
early stages of the pandemic [6]. Both studies might be 
considered complementary, this one investigates the 
impact of the pandemic on the global and the Turkish 
economies from the beginning to the present in contrast to 
the previous one. Hence, the main objective of this study 
is to evaluate the potential short-term macroeconomic 
impacts of the Covid-19 pandemic on the world and 
Turkish economy based on reliable data released by the 
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IMF, the OECD, the World Bank (WB), Turkish public 
institutions, and other international institutions and 
current debate. Analyzing the Covid-19 pandemic impact 
on the economies in the medium and long term is not our 
priority since it is not known where the pandemic will 
evolve.
Nevertheless, every data related to the world economy 
could not be reached due to the dynamic structure of the 
pandemic since the national data generally has not been 
published in the middle of the year. Hence, the international 
economic organizations could not access some countries’ 
data. In this context, our study focuses on average OECD 
area data if the world value of the related economic 
variable does not exist. Since the OECD economies share 
in world GDP is around 50% with 38 member countries5, it 
is thought that average OECD data can be used as a proxy 
for the world economic data in this study.
As a result, some basic macroeconomic variables such 
as growth rate, inflation, interest and unemployment rate, 
trade volume, fiscal balance, travel and tourism, health 
spending, and fiscal support are presented to analyze the 
global and Turkish real sector, financial sector, public 
sector, labor market, foreign trade, and travel and tourism 
sector developments in the short-term. Furthermore, 
based on current data and discussions, some assumptions 
are made concerning possible changes in the global and 
Turkish economies. Finally, this study is concluded.
2. Global economic costs of the pandemic until mid-2021
The OECD reveals that global output fell by 3.5% in 2020 
due to a sharp decline in global economic activity [3]. 
Despite new virus outbreaks in several economies in the 
fourth quarter of 2020, the global economy recovered 
faster than projected, and global output remained roughly 
better than an estimated 4.2% contraction [39]. It should 
be emphasized that sector specialization in different 
economies has led to variations in countries’ output 
growth rates. Those most have relied on international 
travel and tourism sector faced a more considerable GDP 
loss in 2020. Global GDP growth is forecast to be 5.8% in 
2021 and 4.4% in 2022, with global output exceeding the 
prepandemic level (% 2.7) by mid-2021. However, global 
income will still be around $3 trillion, roughly equal to the 
size of the entire French economy, lower by the end of 2022 
than forecast before the crisis [3].
Before the Covid-19 pandemic, the travel and tourism 
sector employed 10.6% of the worldwide workforce (334 
million), but 62 million jobs were lost, representing a drop 
of 18.5% in 2020. In addition, the global GDP contribution 
of this sector fell from 10.4% ($9.2 trillion) in 2019 to 5.5% 
5 Organisation for Economic Co-operation and Development (2021). OECD share in world GDP stable at around 50% in PPP terms in 2017 [online]. 
Website https://www.oecd.org/sdd/prices-ppp/oecd-share-in-world-gdp-stable-at-around-50-per-cent-in-ppp-terms-in-2017.htm [accessed 21 June 
2021].
($4.7 trillion) in 2020 due to ongoing mobility restrictions. 
Hence, the loss of travel and tourism sector was almost $4.5 
trillion in 2020 [40]. Furthermore, destinations worldwide 
welcomed one billion fewer international arrivals in 2020 
than in the previous year. International arrivals dropped 
by 74% due to an unprecedented fall in service demand 
and widespread travel restrictions. Also, the collapse in 
international travel represents an estimated loss of $1.3 
trillion in export revenues, which is more than 11 times 
the loss recorded during the 2009 global economic crisis 
[41]. As of 2019, international visitor expenditure totaled 
$1.7 trillion, accounting for 6.8% of total exports. While 
domestic visitor expenditure fell by 45%, international 
visitor expenditure fell by a staggering 69.4% in 2020 [40]. 
Government retention plans and reduced hours support 
many jobs, but the potential of job losses and contraction 
persists without full recovery of the travel and tourism 
sector. 
The International Civil Aviation Organization (ICAO) 
reveals that global passenger traffic declined by 60%, and 
the revenue loss was nearly $371 billion in 2020 because 
of the widespread lockdowns, border closures, and travel 
restrictions worldwide. Moreover, the estimated decline 
in total world passengers will be between 44% and 49%, 
and approximately $289 to 323 billion loss of revenues of 
airlines is projected for the year 2021 compared to 2019 
levels  [42]. Nevertheless, cargo flights  increased  40% in 
April 2020 in contrast to the fall in passenger traffic. Also, 
air cargo demand continued to outperform pre-Covid-19 
pandemic levels, with demand up 9%  in February 2021 
compared to February 2019 level [42, 43]. 
The 
International 
Labour 
Organization 
(ILO) 
announces that 8.8% of global working hours were lost 
relative to the fourth quarter of 2019, equivalent to 255 
million full-time jobs in 2020, approximately four times 
greater than during the global financial crisis in 2009. In 
total, there were unprecedented global employment losses 
in 2020 of 114 million jobs relative to 2019. In contrast 
to previous crises, employment losses in 2020 translated 
mainly into rising inactivity rather than unemployment, 
leading to an additional 81 million people shifting to 
inactivity alongside 33 million additional unemployed. 
Hence, the unemployment rate rose by 1.1% points 
to 6.5% around the world in 2020 [44]. Similarly, the 
unemployment rate increased from 5.4% in 2019 to 7.1% 
in 2020 in the OECD countries [3]. Before taking into 
account income support measurements, global labour 
income in 2020 is estimated to have declined by 8.3%, 
which amounts to $3.7 trillion, or 4.4% of global GDP [44].
Overall, world trade volumes are expected to increase 
to 8.2% in 2021, after falling by 8.5% in 2020 despite 
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ongoing weak services trade due to travel restrictions 
and lack of travellers’ confidence [3]. Similarly, global 
merchandise trade volume will likely rise by 8% in 2021 
after declining by 5.3% in 2020 [45]. In the third quarter of 
2020, shipments of computers and electronic components 
increased by 11%, while textile shipments increased 
by 24%, boosted by demand for face masks and other 
protective equipment compared to the second quarter 
of 2020. Surprisingly, after growing at a 10% annual rate 
in the first half of 2020, global pharmaceutical exports 
fell by 1% in the third quarter of 2020, mainly due to 
summer stockpiling [5]. Hence, the increased demand 
for digital technology and medical supplies has boosted 
global trade above prepandemic levels [3]. The better-
than-expected performance at the end of the year can be 
attributed in part to the November release of additional 
Covid-19 vaccines, which helped to increase business and 
consumer confidence. On the other hand, commercial 
services exports fell by 20% in 2020 due to international 
travel limitations that impeded the delivery of services that 
required physical presence or face-to-face interaction [45].
Since oil is a crucial intermediate good, particularly for 
manufactured products and the energy sector, fluctuations 
in the oil market have a spillover effect. Because of the 
general recession of the world economy and the decline 
in demand for fuels and gasoline due to travel restrictions, 
the Covid-19 pandemic has had a significant impact on 
global oil demand. Oil prices fell from $67.3 per barrel in 
December 2019 to $18.4 per barrel in April 2020, but with 
a steady downward trend in Covid-19 cases in the second 
half of 2020, oil prices improved as well, pushing the price 
of Brent oil to around $50 by December 2020 [5].
 Inflation rate in OECD countries was 1.5% in 2020 
and is expected to reach 2.7% for 2021. The inflation rate 
is projected to increase significantly due to the past rise 
in commodity prices, particularly oil, and some one-off 
effects of the crisis. A combination of possible negative 
supply-side effects such as higher operating costs due 
to containment measurements, disruptions in global 
supply chains, and a desire to make up for past losses in 
revenues could push up inflation by more than projected. 
Upside risks to inflation include further exchange rate 
depreciation, and food and energy price increases, 
especially in countries where central bank credibility has 
already been weakened [3].
Global stock markets have fallen sharply as investors 
continue to worry about the broader uncertain economic 
impact of the pandemic. The FTSE, Dow Jones Industrial 
Average, and the Nikkei all saw massive declines in the 
first months of the Covid-19 pandemic. Although the 
major Asian and US stock markets recovered following the 
announcement of the first vaccine in November, the FTSE 
6 BBC (2021). FTSE 100 suffers worst year since financial crisis [online]. Website https://www.bbc.com/news/business-55500103 [accessed 11 June 2021].
is still in negative territory. The FTSE dropped by 14.3% in 
2020, its worst performance since 20086. 
The rise in fiscal deficits has stemmed primarily from 
the collapse in revenues caused by lower economic activity. 
In response, central banks in many countries reduced the 
interest rates to make borrowing cheaper and encourage 
spending to boost the economy. The longer the pandemic 
lasts, the greater the challenge is to public finances, and 
government deficits and debt have risen to unprecedented 
levels. To calm down markets and encourage spending, 
central banks have lowered policy rates and purchased 
government bonds, thereby, facilitating the fiscal 
responses to the pandemic. The size, composition, and 
duration of fiscal support have varied across countries, 
which has influenced its effectiveness. Among economies, 
the majority of supports was devoted to employment 
protection and household income support [46]. As a 
result, the fiscal balance increased from a deficit of 3.1% 
of GDP in 2019 to 10.8% in 2020 in OECD countries. 
The estimated deficit value for 2021 is 10.1% due to the 
continuing fiscal supports [3]. Global additional spending 
and foregone revenues of governments was 9.2% of 2020 
GDP [46].
Along with governments, some international financial 
institutions provide financial supports to economies to 
rapid recovery from the Covid- 19 pandemic. For instance, 
the ECB has introduced a Pandemic Emergency Purchase 
Programme (PEPP) to support the euro area banks, firms, 
and households through the Covid-19 crisis.  In this 
context, PEPP increased from €500 billion to €1850 billion 
in December 2020 [5]. In addition, the IMF is providing 
financial assistance and debt service relief to member 
countries, facing the economic impact of the Covid-19 
pandemic. Overall, the IMF is currently making about 
$250 billion, a quarter of its $1 trillion lending capacity, 
available to member countries [47]. Furthermore, the WB 
has expected to deploy up to $160 billion over 15 months 
through June 2021 to support countries’ responses to the 
Covid-19 crisis [48].
Around the world, an estimated 400 million people do 
not have access to basic health care services. Nearly 100 
million individuals are pushed into extreme poverty each 
year due to having to pay for their own health care. These 
numbers have increased with the Covid-19 pandemic, as 
they will continue to rise as people lose jobs and health 
insurance costs increase [49]. Before the onset of the 
Covid-19 pandemic, average health spending as a share 
of GDP across the OECD countries was around 8.8% 
[50]. Governments have increased their health spending 
with additional spending or foregone revenues during 
the Covid-19 pandemic, which is accounted for 1.2% of 
2020 GDP. The IMF projected that while average advanced 
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economies’ share of health spending in GDP will increase 
by 2.6% in between 2020 and 2030, this share will be 
estimated to be 0.5% and 0.1% for emerging market and 
middle-income countries, and low-income countries, 
respectively [46]. Hence, it seems that current inequalities 
in health care services worldwide will continue in the 
postpandemic period.
Briefly, as shown in Figure, global economic output is 
projected to rise by nearly 6% in this year, an impressive 
surge after the 3.5% contraction in 2020. While the 
unemployment rate in OECD countries is estimated to 
fall from 7.1% in 2020 to 6.5% in 2021, there will be no 
significant change in the fiscal balance deficit of the OECD 
area, and it is expected to be around 10% of GDP level 
2021. Nevertheless, world trade volumes are projected to 
increase by close to 8.2% in 2021, falling by 8.5% in 2020. 
Although inflation in the OECD area declined by 0.4% 
point to 1.5% in 2020, it is expected to rise 2.7% in 2021 
due to the delayed higher commodity prices [3].
3. Costs of the pandemic on Turkish economy until 
mid-2021
Despite the OECD’s prediction of a 1.3% decrease in 
Turkish GDP in December 2020, Turkey demonstrated 
a more remarkable recovery from the Pandemic in 2020, 
with a growth rate of 1.8%.  Turkey’s GDP is expected to 
rise at a rate of 5.7% in 2021 before slowing to 3.4% in 2022 
in the absence of possible future shocks [3]. Turkey’s GDP 
increased by 7% in the first quarter of 2021 [51], but the 
surge in infections which appears to have peaked in May 
2021. Therefore, new confinement measures have affected 
employment, incomes, and private consumption from the 
second quarter of 2021. The vaccine rollout started fast in 
February, but the authorities ran into serious procurement 
issues, causing them to scale down their goals and seek 
more diverse measurements until June 2021 [3].
Turkey’s overall export and import values were nearly 
$169.482 billion and $219.397 billion, respectively, 
resulting in a negative trade balance of $49.915 billion in 
2020, which is higher than the $29.512 billion negative 
trade balance in 2019 [52]. Turkey’s net exports declined 
by 7.3% in 2020 but it is expected to increase 2.7% in 
2021 [3]. In May 2021, exports increased by 65.50%, and 
imports increased by 54% compared to the previous year’s 
same month [53]. As of 2020, the top export destinations 
of Turkey were Germany (9.4%), the US (6%), and Italy 
(4.7%) and the top import origins were China (10.4%), 
Germany (9.8%), and Russia (8.1%) [52]. These data show 
that the supply chain of Turkey does not depend on one 
country primarily, so the Covid-19 pandemic’s detrimental 
influence on the manufacturing sector did not persist 
long in Turkey. For instance, the manufacturing sector 
in Turkey shrank by 8% in the second quarter of 2020, 
but then this sector showed a strong rebound in the next 
quarter with a 28.6% growth [51]. Therefore, the pandemic 
has not hurt the Turkish manufacturing sector as expected 
in the end. Turkish current account deficit recorded $1.127 
million, indicating a decrease of $1.947 million compared 
to June of the 2020, bringing the 12-month rolling deficit 
to $29.674 million [54]. Although Turkey had a current 
account surplus in 2019 with 0.9% of GDP value, the 
Covid-19 pandemic widened the current account deficit to 
5.2% in 2020 [3]. However, this deterioration was mainly 
driven by a decrease in the goods trade deficit and an 
increase in services surplus, which results from the global 
economic disruptions caused by the Pandemic.
The tourism sector has been hardly damaged in Turkey 
since tourism income fell by 65.1% and declined to $12 
billion in 2020 compared to the previous year. In parallel, 
departing visitors decreased by 69.5% in 2020 compared to 
Source: [3], [58], [74] and [75] 
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
2019
2020
2021 projection
2019
2020
2021 projection
OECD Countries
Turkey
Real GDP growth
Unemployment rate
Inflation rate
Fiscal balance
Trade growth
Figure. Economic outlook on OECD Countries and Turkey.
AÇIKGÖZ and GÜNAY / Turk J Med Sci
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2019 and declined to nearly 16 million people [55]. In April 
2020, global international passenger capacity experienced 
an unprecedented 94% reduction for Turkey [42]. The 
navigational charge losses of Turkey were approximately 
$210 million in 2020, declined from $363 million in 2019 to 
$153 million at the end of 2020 [56]. Additional measures 
to facilitate a strong tourism season in 2021 summer have 
been implemented in Turkey, including a vaccination 
process for employees of the travel and tourism sector.
Turkey has struggled with the high unemployment 
rate (13.5%) in the first quarter of 2021 since 2018. The 
number of unemployed persons increased by 89 thousand 
to 4 million 277 thousand persons compared to the 
same quarter of the previous year [57]. It seems that the 
unemployment rate increased, especially among the 
blue-collar workers and service sector employees, due to 
the bankruptcies and closures of factories and small and 
medium workplaces, who have been probably suffered the 
major economic losses of the Covid-19 pandemic. This 
situation has led to income losses for workers because of 
the weak labour market in Turkey.  
Moreover, the Consumer Price Index (CPI) of Turkey 
increased by 16.59% annually in May 2021. On the 
other hand, transportation with 28.39%, furnishings and 
household equipment with 21.79%, and health with 19.30% 
were the main groups where high annual increases were 
realized [58]. However, the central bank’s management 
has reiterated its commitment to the 5% inflation target 
against the 16,59% current inflation rate and persisting 
inflationary pressures in Turkey [59].
Additionally, unprecedented uncertainty will bring 
more risks for investors in Turkey. The value of Turkey’s 
Economic Confidence Index, 99.3 in January 2020, 
decreased by 3.1 points to 96.2 in January 2021. This 
fall stemmed from the decline in service and retail trade 
confidence indices [60]. On the other hand, the Turkish 
Real Sector Confidence Index increased from 62.30 
to 107.40 in April 2021 compared to the same month 
in the previous year [61]. Therefore, the data indicate 
that increased confidence will bring better business 
performance in Turkey soon.
The Central Bank of the Republic of Turkey (CBRT) 
decided to keep the policy interest rate at 19% in May 2021 
to improve the financial conditions, which is higher than 
compared to the same month in the previous year (8.25%) 
[62]. Furthermore, on March 31, the CBRT introduced 
a program of outright purchases of sovereign bonds and 
has substantially increased its liquidity facilities to banks 
[63]. Today, Turkey’s 5 Years Credit Default Swaps (CDS) 
premium value is high with 382.62 points on 21 June 2021 
but lower than 2020’s maximum value of 643.15. This 
7 World Government Bonds (2021). Turkey 5 Years CDS [online]. Website http://www.worldgovernmentbonds.com/cds-historical-data/  [accessed 13 
June 2021].
can be interpreted as the Turkish economy is under the 
pressure of financial risk7 since the higher CDS premium 
might cause pressure on the Turkish foreign borrowing 
interest rate to rise. 
The Turkish authorities predict that the total 
discretionary fiscal support package will cost 638 billion 
Turkish liras, 12.7% of GDP, in March 2021 to fight the 
Covid-19 pandemic. Debt guarantees to businesses and 
people, loan service deferrals by public banks, tax deferrals 
for businesses, equity injections into public banks, and 
a short-term labor program are examples of crucial 
fiscal measurements in Turkey [63]. In addition, Turkey 
implemented substantial Value-Added Tax (VAT) cuts for 
services and a withholding tax reduction for tradespeople. 
For instance, the VAT on passenger transportation, 
wedding organizations, residential maintenance and repair, 
dry cleaning, and tradespeople services like tailoring was 
reduced from 18% to 8%. Moreover, until mid-May 2021, a 
nationwide prohibition on layoffs was in effect. Besides, for 
families with monthly salaries of less than 5.000 Turkish 
liras ($740), state lenders have proposed a low-interest 
credit package of up to 10.000 Turkish liras ($1.477). The 
government also announced that it would pay 60% of the 
staff salaries of firms forced out of business under the 
short-term employment allowance program. In addition, 
the minimum pension was raised to 1.500 Turkish liras 
($221) to protect retirees from the pandemic’s harmful 
consequences, and bonus payments were pushed to earlier 
dates. The government has recently begun paying 1.000 
Turkish liras ($148) to 4.4 million needy families [64]. In 
the first quarter of 2021, compared to the same quarter the 
previous year, employee compensation climbed by 16%, 
while net operational surplus/mixed-income increased by 
39.1% [57].
Among G20 emerging economies, Turkey provided the 
most liquidity support compared to its GDP in response 
to the Pandemic. Turkey left behind countries, including 
China, Brazil, India, and South Africa, with a liquidity 
support to GDP ratio of 9.5%. Brazil followed it with 6.2% 
and India with 5.2%. This ratio was 1.5% in Russia, and 
1.3% in China. Besides, Turkey’s additional spending and 
foregone revenues were 2.7% of 2020 GDP and lag behind 
many countries [65].
Public deposit banks began new retail loan campaigns 
for home buying and consumer spending in June 2021. Also, 
loans to farmers have been postponed for six months. As 
part of the government’s Coronavirus Economic Stability 
Shield program, the Treasury-Backed Credit Guarantee 
Fund increased from 25 billion Turkish liras ($3.67 
million) to 50 billion liras ($7.34 million). The enterprises’ 
principal and interest payments were postponed for at 
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3189
least three months, and public lenders refinanced them. 
Turkey extended repayment periods for certain credit card 
loans, introduced low-interest credit packages for low-
income households, allowed tradespeople to postpone 
payments without penalty, provided new low-interest 
loans and credit cards with longer repayment periods for 
tradespeople, and offered new credit packages for their 
jobs [66].
Turkey’s health spending was roughly 4.4% of its GDP 
in 2019, lower than the OECD average of 8.8%. However, 
health spending in OECD countries increased sharply 
in 2020 due to the pandemic. According to preliminary 
estimates, health spending in a group of 16 OECD 
countries jumped to roughly 9.9% of GDP on average in 
2020 [50]. Turkey has also boosted its health spending 
through additional spending or revenue foregone during 
pandemic, accounting for 0.3% of GDP in 2020. As a 
result, IMF estimated that Turkey’s health spending as a 
share of GDP would rise 0.5% on average until 2030 [46].   
Overall, Turkey is the 19th largest economy globally, 
with a GDP of $761 billion [67]. Turkey was among the 
few countries to experience positive economic growth in 
2020. As shown in Figure, GDP growth is expected to be 
strong in 2021 with 5.7% if there will be no unprecedented 
shocks. Turkey’s unemployment rate decreased by 0.6% 
point to 13.1% in 2020 due to the decline in labor force 
participation. It is estimated to increase 14% in 2021 due 
to the weak labour market during the Covid-19 pandemic 
[3]. Besides, inflation rate increased by 2.8% point to 
14.6% in 2020, probably due to inflation expectations and 
risk premia. Inflation is projected to rise to 16.5% in 2021 
in Turkey [68]. Turkey’s net export volume fell from 3.2% 
in 2019 to -7.3% in 2020, and it will be expected to rise to 
2.7% in 2021 as in other countries [3]. On the other hand, 
Turkey’s fiscal balance deficit rose from 2.9% of GDP in 
2019 to 3.4% in 2020. However, the Turkish fiscal balance 
will be worsened by an estimated 5% deficit in 2021 [68]. 
4. Discussion
Estimating the real economic consequences of the 
Covid-19 pandemic is currently difficult due to the 
Pandemic’s spiral effects on both the national and global 
economies as a result of increased trade and financial 
linkages brought on by globalization [69]. In general, the 
crisis response is organized around four thematic pillars 
that are aligned with economies’ comparative advantages: 
saving lives threatened by the pandemic, protecting the 
poor and vulnerable, assisting in the retention of jobs and 
businesses, and working to build a more strong recovery 
8 Our World in Data (2021). Statistics and Research: Coronavirus (COVID-19) Vaccinations [online]. Website https://ourworldindata.org/covid-
vaccinations [accessed 16 August 2021].
9 Financial Times (2021). Covid-19 looks like a hinge in history [online]. Website https://www.ft.com/content/de643ae8-9527-11ea-899a-f62a20d54625 
[accessed 14 June 2021].
[48]. Countries who were fast to vaccinate their populations 
against the Covid-19 pandemic and manage infections 
through efficient public health measurements will likely 
rebound more quickly. However, while vaccination rates in 
many advanced economies increase, poorer and emerging 
market countries lag behind [3]. In the short term, global 
economic recovery will be impossible if equal vaccination 
distribution between and within countries is not achieved. 
For example, only 1.2% of people in low-income countries 
have gotten at least one dose of the Covid-19 vaccination, 
even though 31.2% of the world’s population has received 
at least one dose8. This divergence will probably tend to 
increase economic inequality within countries in the 
short-term. However, this condition might hurt the world’s 
social peace in the medium and long-term.
It is crucial to highlight that in the early stages of the 
Covid-19 pandemic, the global leader of the US failed to 
safeguard its citizens, leaving them unwell and ruined. 
Millions of Americans have become impoverished and 
unable to access health care services. The Covid-19 
pandemic killed nearly as many Americans than all of the 
military conflicts of the last 70 years combined9. Despite 
warnings and considerable advantages, including vast 
resources, biomedical infrastructures, and scientific skills, 
the US missed every opportunity to contain the virus. In 
contrast to many other countries, refused to take effective 
measurements to reverse the virus’s upward trend. This 
delay has affected the American economy badly, and the 
US economy contracted by 3.5% in 2020 [3]. According 
to the US experience, acting quickly is likely the most 
critical lesson in determining national outcomes during 
pandemics.
Although 
increasing 
vaccine 
production 
and 
distribution is the most substantial current economic 
policy for boosting economic development, the future of 
the global economy remains uncertain, and the recovery 
will be uneven. According to the IMF’s economic 
predictions, between 90 million and 130 million full-time 
equivalent jobs will be lost, with global output growth of 
about 6% in 2021. However, this estimation is subject to 
vary based on virus evaluations around the world. Thus, 
the picture is highly unpredictable, with both upside and 
downside risks making forecasting difficult. Therefore, 
rebuilding confidence in macroeconomic policy and 
structural reforms are vital for rebounding the national 
and world economy [70].
The Covid-19 pandemic demonstrates the importance 
of public health management. However, many nations’ 
health systems are overburdened, and expenditures will 
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be required to improve staff and health care capacity 
to manage the possibility for Covid-19 renewal and 
subsequent pandemics. Governments all over the world, on 
the other hand, have promised billions of dollars towards 
a Covid-19 vaccine and treatment options; as a result, 
the market shares of some pharmaceutical companies 
involved in vaccine development have increased [71]. As 
a result, it is not incorrect to suggest that pharmaceutical 
corporations have benefited from the Covid-19 pandemic 
at most. In addition, several countries supply vials, 
syringes, needles, and even cool boxes and freezers needed 
to manufacture, distribute, and administrate vaccines. 
Hence, mass production, distribution and administering 
the vaccine supply chain are essential as vaccination [3].
ILO reveals the contrast between massive job losses 
in hard-hit sectors such as accommodation and food 
services, arts and culture, retail, and construction and 
the positive job growth evident in many high-skilled 
services sectors such as information and communications 
technology (ICT), and financial and insurance activities 
[44]. The World Economic Forum’s Future of Jobs Report 
2020 projected that technological change is set to displace 
a range of skills in the labour market while driving greater 
demand for a new set of core skills such as analytical 
thinking, creativity, critical thinking, and digital skills 
[72]. Because of a particular shortfall in digital skills, 
there is a significant additional disruption in the labour 
market due to the Covid-19 crisis. Also, only 53.6% of 
the global population uses the internet, which refers to 
the digital divide around the world. Hence, the impact of 
the pandemic should serve as a wake-up call for countries 
that need to embrace the digitalization process, incentivize 
companies to move towards digital business models, and 
invest more in ICT development and digital skills [73]. 
The Covid-19 pandemic measurements also disrupted 
global education worldwide, and over 1.6 billion students 
in more than 190 countries were out of school in months. 
Two-thirds of an academic year has been missed on 
average worldwide due to full or partial closures in 
months, while half of the world’s student population 
is still affected by closures. The long-term closure of 
schools poses a great risk for students’ future since they 
will probably fall below the minimum proficiency levels 
in both theory and practice. Besides, 24 million children 
and youth are at risk of dropping out due to the digital 
divide. Since digital transformation is closely associated 
with human capital development, more education funding 
is needed for education recovery in most countries to 
improve online education services and upgrade curricula 
for changing world [74]. Also, more alignment is needed 
between employers and educators to enable students to get 
the new digital economy skills. However, these reforms 
will probably bring additional economic costs to the fiscal 
budget of countries.  
For many economies, currently, debt affordability is 
not a risk, but it will be inevitable due to the high amount 
of income support and government support packages. 
Vaccine supply brings an extra economic burden to the 
budget of countries. These additional spendings will bring 
more taxation on consumers and producers in the future. 
This situation is likely to deepen the economic crisis in 
the medium and long-term. Today, international financial 
institutions like IMF and WB provide financial assistance 
and debt service relief to member countries facing the 
economic impact of the Covid-19 pandemic. Nevertheless, 
whether these aids are given equal or transparent between 
countries is a separate debate. 
There will inevitably be paradigm shifts in the economy 
in the postpandemic period. In contrast to the free market 
economy, public and private sector cooperations will 
be essential for economic activities since the Covid-19 
pandemic shows that neither governments nor businesses 
can achieve this complex postpandemic economic 
transformation alone. In addition, it seems the well-
balanced fiscal support and flexible approach need to the 
economic recovery with the cooperation of the public and 
private sectors [75].
Today, global viruses will be seen as a threat like a 
nuclear attack, biological weapon, or global terrorism 
since their impacts on humans and the world are similarly 
very destructive, as seen in the Covid-19 pandemic [6]. 
Furthermore, the pandemic has brought to light another 
potential global threat, named bioterrorism, because the 
virus’s terrible impact, which these terrorist groups have 
acknowledged, has renewed their interest in acquiring, 
manufacturing, and employing biological weapons [76]. 
For this reason, countries that could develop a biological 
defense system or infrastructure for the virus attack will 
have more power in the postpandemic world. 
5. Conclusion
Although there were variations in recovery across 
economies, Turkey was among the few countries with 
China that showed a solid and positive rebound with 1.8% 
economic growth during the Covid-19 pandemic in 2020 
though the global output declined by 3.5%. Hence, Turkey 
is apart from its peers due to the rapid recovery resulting 
from initial better policy responses such as monetary and 
credit expansion and large liquidity support.  From this 
perspective, it is expected that the world and Turkey’s GDP 
growth will be 5.8% and 5.7%, respectively, in 2021 without 
further major shocks.  Nevertheless, new confinement 
measures taken in May 2021 due to the pandemic’s third 
wave might adversely affect employment, incomes, 
private consumption, and the travel and tourism sector in 
Turkey. This unprecedented uncertainty characteristic of 
the Covid-19 pandemic has likely changed all economic 
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predictions, and sustainable growth for Turkey might not 
be possible in the short-term. 
Global economic output is projected to rise by nearly 
6% in 2021, an impressive surge after the 3.5% contraction 
in 2020, but there will be no ordinary recovery in the 
world due to the unprecedented economic uncertainty. 
Also, economic rebound depends on the effectiveness of 
vaccination programs, public health policies, fiscal polices, 
and the country’s dependence on a hard-hit sector such 
as travel and tourism in the short-term. Although the 
unemployment rate and fiscal balance deficit are projected 
to fall in 2021 in OECD countries, world trade volumes are 
estimated to rise. Besides, inflation is expected to increase 
in the OECD area due to the past rise in commodity and 
oil prices, and some one-off effects of the crisis. 
In Turkey, as in other countries, the economic impact 
of the Covid-19 pandemic has been severe. Turkey’s 
unemployment rate decreased due to the decline in labor 
force participation but it is estimated to increase due to 
the weak labour market during the Covid-19 pandemic. 
Besides, poverty in Turkey is estimated to have risen by 
about 1.5 million people as a result of the pandemic [68]. 
Moreover, the inflation rate has increased, most probably 
due to the inflation expectations and risk premia. It is 
obvious that Turkey’s unemployment and inflation rate 
displayed a different trend in 2020 compared to the OECD 
economies. Although the tourism sector has been hardly 
damaged in Turkey, a sharp increase in tourism revenues 
is expected in 2021 once mass vaccination occurs.  As of 
August 2021, the share of people fully vaccinated against 
Covid-19 virus is 39%, and the share of people only partly 
vaccinated against Covid-19 virus is 13% in Turkey, and 
Turkey ranked 17th in the world10. 
Although Turkey’s fiscal balance deficit rose, it showed 
a better performance than other OECD countries. Turkey 
provided the most liquidity support among G20 emerging 
economies during the pandemic. However, the Turkish 
fiscal balance will be worsened because of the extension 
of fiscal supports. Currently, the actual costs of the fiscal 
policy supports and vaccination to the Turkish economy 
have not been yet precise. 
10 Our World in Data (2021). Statistics and Research: Coronavirus (COVID-19) Vaccinations [online]. Website https://ourworldindata.org/covid-
vaccinations [accessed 16 August 2021].
Today, vaccines are seen as the key to a safe and 
permanent transition to more typical economic and 
social conditions. Countries that have been quick to 
vaccinate their population against the Covid-19 virus 
and manage to control infections through effective 
public health strategies have likely displayed more quick 
recovery.  Hence, it seems that the pandemic will provide 
some economic and political opportunities to some 
countries if they can manage to control the virus earlier 
by effective vaccination policy.
As a result of the digital transformation in 
every industry, the world will not be the same in 
the postpandemic period. Remote working, video-
conferencing, 
online 
entertainment, 
e-commerce, 
and digital currencies, for example, have all grown in 
popularity since the beginning of the pandemic. Hence, 
countries should focus on the digitalization process, 
dissemination of ICT, and digital skills. Supporting 
students and young people to remain in education and 
enabling them to acquire digital skills by upgrading their 
curriculum based on new labour market demand should 
be a priority for governments. Countries should take 
urgent measurements to prevent a youth unemployment 
crisis and promote better mental health for young people. 
Moreover, cooperation between public and private 
sectors will probably be a new economic approach rather 
than a free market.
In sum, Turkey must concentrate on new structural 
reforms to boost the economy, invest in health care, adapt 
to the new postpandemic world, and achieve a sustainable 
economy along with the other countries. Overall, trends 
in other economies suggest that the cost of the Covid-19 
pandemic will not be recovered just by attaining a 
vaccination threshold in the short-term. In other words, 
vaccination seems to be a beginning rather than an end, 
and the policy choices governments make today will 
determine their place in the new world. Nevertheless, 
global economic recovery will be impossible in the near 
future if equal vaccination distribution between and 
within countries is not achieved.
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Short-term impact of the Covid-19 pandemic on the global and Turkish economy.
Açikgöz, Ömer,Günay, Asli