Ukraine crisis to have profound impact on Turkish economy – analysis
Turkey stands to be one of the countries most affected by the escalation of tensions between Russia and Ukraine, which turned into a Russian invasion by Thursday.
Ankara maintains sanctions would not be an effective solution to the crisis, however, many of its allies has already announced sanctions against Moscow, including the United States and European Union.
Turkish trade, tourism, manufacturing and agriculture sectors are at risk, news website Bianet said in an analysis.
Turkey’s annual trade volume is $34.7 billion with Russia, and $7.4 billion with Ukraine, according to Turkish Statistical Institute figures. Russia is one of Turkey’s largest partners in exports and imports.
Russia buys citrus, grapes and tomatoes as well as agricultural machinery to process such produce from Turkey. Other Turkish exports include textiles and accessories, while imports from Russia to Turkey are natural gas, oil, coal, steel products, aluminium, and several agricultural products.
An important product is wheat, with Turkey importing 64.6 percent of its wheat from Russia and 13.4 percent from Ukraine, Bianet found. In 2021, the country’s total wheat imports were valued at $1.8 billion.
Another product is sunflowers, which Turkey imports from Russia by 65.5 percent and Ukraine by 4.2 percent to be processed domestically.
However, the two most significant areas of Turkey’s dependence on Russia are energy and tourism. At least 33.6 percent of Turkey’s natural gas came from Russia in 2021, and Russian tourists made up 15 percent of all visitors to the country.
Some 4.65 million Russian and 2.55 million Ukrainian tourists accounted for 23 percent of Turkey’s foreign tourists last year, who in total provided the country with a much needed $24.5 billion in revenue.
There is one natural gas agreement with Russia in force until 2025, but another has already expired by the end of 2021. Turkey announced a new agreement in November last year, but no official statement was made.
Both sectors would have significant impact on Turkey’s current deficit, as rising oil prices would increase it and falling tourism revenue would make it harder to compensate.
Meanwhile, Turkey uses engines produced by Ukrainian companies for its drones, which it then exports to Ukraine and 12 other countries.
A state-owned Russian company is constructing Turkey’s first nuclear power plant in Akkuyu in the south, to the cost of more than $20 billion. In 2021, Turkish contractors in construction had $11.2 billion’s worth of projects in Russia, and $1.6 billion in Ukraine. Russian projects accounted for 38 percent of the business volume in 2020.