How the earthquake in Turkey will impact Uzbekistan's economy.

Experts from the Institute for Forecasting and Macroeconomic Research (IFMR) have analyzed the impact of the earthquake in Turkey on Uzbekistan's economy and the potential for cooperation between the member states of the Collective Security Treaty Organization (CSTO) in the area of monitoring natural disasters and their prevention.

The study covered foreign trade, investments, labor migration, and GDP. In 2022, the majority of Uzbekistan's exports to Turkey ($1,5 billion) consisted of raw materials (copper, zinc, and plastics), while imports ($1,7 billion) comprised machinery and equipment, chemical products, pigments, and pharmaceuticals. The analysis revealed the following:

— Large-scale reconstruction projects in regions affected by the earthquake could boost demand for imports of copper, zinc, plastics, aluminum, and food products from Uzbekistan;

— The current situation may negatively affect the export of cotton yarn to Turkey ($523,3 million in 2022), as Kahramanmaraş, which is one of the centers of the textile industry, has suffered significantly from the earthquake;

— Textile production in Uzbekistan may be affected due to a shortage of dyeing pigments and fabrics, which are imported from Turkey.

An increase in government spending and a sharp rise in inflation against the backdrop of the earthquake in Turkey could reduce the incomes of labor migrants and lead to a decrease in the outflow of remittances from this country ($230 million in 2021).

The earthquake that occurred in Turkey may impact not only the economy of that country but also neighboring regions, including Uzbekistan. Experts' assessments, based on scenarios developed by The Thomson Reuters Trust Principles, indicate a potential reduction in Uzbekistan's GDP growth by 0.03 to 0.1 percentage points in 2023 if Turkey's GDP growth declines.