Shops close across Turkey, dimming hopes of a boom year (updated)

Vakko Tekstil ve Hazir Giyim Sanayi Isletmeleri

19/03/2020 05:53

* Number of cases in Turkey doubles, second death reported
    * Ankara in early stages of trimming growth view -sources
    * Other supportive measures could be announced -sources
    * Erdogan announced $15 billion economic support package
    * Mass prayers banned, cafes closed, many flights halted
    * Association recommends closure of malls

 (Adds sources on government measures, economist, brands
association)
    By Ceyda Caglayan and Orhan Coskun
    ISTANBUL/ANKARA, March 19 (Reuters) - Shops closed across
Turkey on Thursday to help halt the coronavirus spread, dimming
the economy's prospects and raising questions for hundreds of
thousands of workers after Ankara pledged $15 billion in support
and advised Turks to stay home.
    Clothing retailers shuttered and malls, with some 530,000
employees and annual turnover of $160 billion, were set to
follow suit after Turkey announced cases of the virus had nearly
doubled to 191 including a second death.
    A day after President Tayyip Erdogan announced a series of
steps to backstop the economy, two sources said government
officials are in the early stages of trimming private
expectations for economic growth, which was publicly forecast to
be 5% this year.
    A drop in unemployment from above 12% last month to below 9%
by year end is now seen as unlikely, while public spending is
expected to be a bigger-than-expected driver for the major
emerging market economy, they said, requesting anonymity.
    However Turkish Finance Minister Berat Albayrak said in a TV
interview on Thursday he has "no concerns" about meeting the
government's growth, budget and inflation targets in 2020.
 urn:newsml:reuters.com:*:nI7N2B401W
    Turkey - which had just recovered from a recession last year
- has taken steps in the last week to rein in the coronavirus
spread, closing cafes, banning mass prayers and halting flights
to 20 countries.  urn:newsml:reuters.com:*:nI7N2B4021
    The worldwide effects of the highly contagious respiratory
illness, including mass quarantines and travel restrictions,
have raised prospects of a severe global recession that would
slam Turkey's tourism and export sectors.  urn:newsml:reuters.com:*:nL8N2BC4NN
    On Wednesday Erdogan called on people to minimise social
contact until the virus threat recedes, but he did not tell them
to stay away from work as he announced a 100 billion lira
($15.40 billion) economic support package.  urn:newsml:reuters.com:*:nL8N2BB74P
    Ankara is eyeing potential measures beyond those announced
by Erdogan, including on taxes and unemployment insurance, which
could be taken in the future, the two sources told Reuters. 
    "There are several steps that are being worked on and these
could be implemented step by step when necessary" after a
re-evaluation in April, said one of the sources. 
    The lira  TRYTOM=D3  was 0.9% weaker against the dollar on
Thursday - hitting its weakest level since the depths of a
currency crisis in September 2018 - and bringing its losses this
year close to 10%. It shed 36% in the last two years.
    The head of Turkey's United Brands Association, which
represents 384 brands and 70,000 domestic stores, told Reuters
store sales had dropped 70% in the past week due to the virus
and companies cannot make up for them. Online sales
infrastructure was insufficient, added Sinan Oncel.  urn:newsml:reuters.com:*:nI7N2B4020
    
    'SHARP' CONTRACTION
    Retailers including listed companies Mavi Giyim  MAVI.IS 
and Vakko Tekstil  VAKKO.IS  said they were closing retail
stores. Mavi shares dropped 4.7% and Vakko fell 3.5%.
    Mavi said its priority was the health and safety of staff
and customers as it closed stores in Turkey, Germany and Canada,
adding that its online stores would remain open. 
    The AYD shopping centres' association said its board
recommended that malls shut and it was awaiting instructions
from authorities. "None of our employees will lose their work
and (the situation of) our tenants will be eased as necessary,"
said the AYD, which says Turkey has 435 malls.
    After meeting ministers and business leaders, Erdogan said
on Wednesday Turkey would postpone debt payments and reduce the
tax burden on some sectors. "None of our citizens must leave
their homes or get into contact with anyone, unless absolutely
necessary, until the threat disappears," he said.
    Among specific measures, Erdogan said Turkey's tourism
accommodation tax was being suspended until November to support
the key tourism sector, which accounts for some 12% of the
economy. Debt repayments of companies affected by the
coronavirus will be postponed for a minimum of three months.
    Jason Tuvey, senior emerging markets economist at Capital
Economics, said Turkey's containment measures "will lead to
severe disruptions to economic activity" and cause the economy
to "contract sharply" in the second quarter.
    On Tuesday, Turkey's central bank cut its key interest rate
by 100 basis points at an earlier-than-scheduled policy meeting.
 urn:newsml:reuters.com:*:nL8N2BA4CX 
    On Thursday, luxury goods chain Vakko said it was
temporarily halting production activities and shutting stores.
Others announcing closures included Boyner, Ipekyol and Marks &
Spencer stores in Turkey, operated by Fiba Retail.
 ($1 = 6.4949 liras)

 (Additional reporting by Daren Butlner; Writing by Jonathan
Spicer; Editing by Dominic Evans and Angus MacSwan)
 ((daren.butler@tr.com; +90-212-350 7053; Reuters Messaging:
daren.butler.thomsonreuters.com@reuters.net))