Turkey’s “megaprojects” — a slew of multibillion-dollar infrastructure investments that Ankara has showcased as a hallmark of its economic success — are increasingly turning into a financial quagmire under the combined impact of the COVID-19 crisis and Turkey’s underlying economic woes. Istanbul’s posh new airport is likely to be first in line in potential nationalizations that Ankara might be forced to consider amid growing uncertainty on whether giant transport investments could survive as profitable ventures.

In Turkey, the economic fallout of the pandemic came atop ongoing fragilities that had already stymied economic growth in the past two years. In its April forecast, the International Monetary Fund projected that the Turkish economy would contract at least 5% this year, while leading indicators suggest the shrinkage could be even worse. 

The megaproject investments — public-private partnerships that had flourished from 2011 onward — rested on the assumption that the Turkish economy would continue to grow by at least 5% per year and enjoy continued inflows of foreign funds that would keep foreign exchange rates more or less stable. 

Yet such hopes did not materialize. From 2014 onward, the economy began to slow under the impact of global economic fluctuations, interest rate increases and a decline in foreign capital flows to Turkey. Eventually, the growth rate fell to an average of about 1.5% in 2018 and 2019.