What matters on Friday, February 25

The security summit chaired by President Recep Tayyip Erdogan discussed the Russia- Ukraine crisis. “At the summit, it was stated that this attack by Russia, which destroyed the (2014) Minsk Accords, violated international law and was unacceptable,” the Communication Directorate said in a statement following the summit. The Foreign Ministry also emphasized its determination to protect Ukraine’s sovereignty and territorial integrity. That’s why trade relations between Turkey and Russia may adversely be affected if the tension escalates.

Turkey has a bilateral trade volume of USD 22.9bn with Russia, and USD 5bn with Ukraine. Russia supplies 39.4% of Turkey’s total refined oil and 56.2% of total crude oil, while Turkey imports 40% of its total natural gas from Russia.

Moreover, Turkey earned 10.5% of its total tourism revenues from Russia and 2.9% from Ukraine in January. Tera Yatirim Chief Economist Enver Erkan says around 20% of the impact on the country’s tourism revenues is at stake if the armed conflict begins. Apart from direct impacts, if the hike in oil and natural gas prices becomes permanent, Turkey’s macroeconomic balances will deteriorate through foreign trade deficit, current account deficit, foreign exchange (FX) rates, and inflation. The number of Russian tourists who visited Turkey dropped by 18.5% as a result of the Ukraine crisis in 2014. Moreover, the biggest fall was 76% in 2015-2016 when Turkey shot down a Russian fighter jet, sparking tension between the two countries. The share of Russia in Turkey’s total tourism revenues declined to 3% in that period.

The Russia-Ukraine crisis has also negatively affected TRY assets. USD/TRY hit 14.65 yesterday. Borsa Istanbul’s BIST 100 Index dropped by 8.17% to 1,851.38 points yesterday from Wednesday’s close of 2,016.03 points. The daily loss of listed companies amounted to TRY 170bn. The Treasury and Finance Ministry, meanwhile warned about FX rates fluctuations and said they are monitoring all possible impacts of the Russian operation and will take all necessary measures. The Ministry said to trust in TRY and avoid risky positions.

Turkish ready-made clothing and textile companies operating in Ukraine have also been adversely affected by Russia’s ‘special military operation’ in the country. Many brands from LC Waikiki to Colins and English Home, which have around 200 stores in Ukraine, have closed their locations due to security concerns.

In the meantime, Turkey has finalized preparations for the evacuation of Turkish nationals from Ukraine amid Russia’s military intervention in the country, Foreign Minister Mevlut Cavusoglu said early this morning.

President Recep Tayyip Erdogan also spoke over the phone with his French counterpart, Emmanuel Macron. The two sides discussed Russia’s military intervention in Ukraine and the latest developments, according to a statement from the Communications Directorate.


Economic confidence index dropped by 2.6% to 98.2 points in February, compared to the previous month, according to the Turkish Statistical Institute (TurkStat).

Marketable production of lignite dropped by 3.0% to 6.28 million tons in December, compared to the previous month, according to TurkStat. The production surged by 11.9% in December on an annual basis.

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