JPMorgan estimates Turkey direct quake damage at $25 bln, expects rate cut

Aftermath of the deadly earthquake in Kahramanmaras
A Turkish flag is seen on a pole in front of a collapsed building, as rescue continues in the aftermath of a deadly earthquake in Kahramanmaras, Turkey February 12, 2023. REUTERS/Guglielmo Mangiapane

LONDON, Feb 16 (Reuters) - Direct costs from the destruction of physical structures in Turkey from the devastating earthquake on Feb. 6 could amount to 2.5% of growth domestic product or $25 billion, JPMorgan said on Thursday.

The combined death toll from the quake in Turkey and Syria has climbed to more than 41,000, and millions are in need of humanitarian aid, with many survivors having been left homeless in near-freezing winter temperatures.

"The earthquake in Turkey has led to a tragic loss of life and carries meaningful economic implications," economist Fatih Akcelik 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 signalled 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. Yet, we believe that the policy rate is less relevant now as the monetary policy transmission mechanism is broken in Turkey."

(This story has been corrected in the headline to say $25 bln, not $2.5 bln, and to fix dropped words in paragraph 1)

Reporting by Karin Strohecker; Editing by Jorgelina do Rosario

Our Standards: The Thomson Reuters Trust Principles.