Because of the war between Russia and Ukraine, Turkey fell short. Manufacturers of textiles and leather goods in Istanbul, Turkey were badly affected by this war. According to Turkish industry officials, their customers in Moscow and Kiev canceled orders worth $200 million in the past week. This condition further suppresses economic conditions in Turkey. It is estimated that there is more than $1 billion in potential revenue that is directly at risk for the textile industry alone, if the conflict in Ukraine continues. Mustafa Senocak, chairman of the Istanbul Association of Leather and Leather Products Exporters, said orders for hundreds of thousands of pairs of shoes and thousands of leather jackets in the city had been cancelled.
“Some Russians say they can pay at the previous ruble exchange rate. Otherwise, they cannot make payments," he said, Friday (4/3/2022).
As is known, the exchange rate of the ruble (Russian currency) against the US dollar fell to the worst point in history, since Moscow invaded Ukraine. However, some Russian customers asked to make payments for Turkish textiles and leather products based on foreign exchange prior to the invasion and the collapse of the ruble.
Russia and Ukraine account for more than $1 billion in Turkish exports of leather shoes, leather jackets and apparel. The blow to trade this time put further pressure on the Turkish economy after the currency crisis that hit last December. This resulted in a spiral of inflation in the country of the former Ottoman Empire.
The drop in export earnings added to Turkey's current account deficit, which ballooned following Russia's invasion of Ukraine last week due to soaring energy prices and is expected to hit tourism this year.
“We are facing cancellations (of orders from Ukraine and Russia). So far, it's worth about 200 million US dollars. This (potential loss of trade) could exceed US$1 billion if this situation continues," said Seref Fayat, head of garment manufacturer TOBB Clothing and Apparel Industry Assembly.
At the same time, Turkey's trade with Belarus, Moldova and Romania is now also cooling due to uncertainty due to geopolitical tensions in Eastern Europe. Some Turkish textile and leather customers from Poland have asked to suspend orders.
Data from the Turkish Ministry of Commerce shows that the textile and apparel sector accounts for 10 percent of the country's GDP. The sector also absorbs nearly 750,000 workers in Turkey. The production value realized by the textile and apparel industry there reached 30 billion US dollars.
Turkey's garment, textile and leather exports will reach 718 million US dollars to Russia in 2021, and; 308 million US dollars to Ukraine.
