Once a premium destination for overseas investors, Turkey’s power sector has recently been struggling with the impact of lower-than-expected growth rates, partial market liberalisation and fixed, long-term natural gas contracts. Power generation firms face further stress as the economic impact of the pandemic bites. Efforts to arrange a new debt restructuring deal have been delayed by the virus and wider economic woes, casting uncertainty over future demand. However, the sector retains some high-grade assets, however, which may attract future investor interest.
Local and international responses to COVID-19 have impacted key sectors of Turkey’s economy, such as manufacturing, retail and tourism. While the global fall in oil prices will ameliorate some of the country’s current account stress, overall the economy is likely to shrink this year for the first time since 2009. Currency and financial sector weaknesses increase the risk of a protracted downturn.