Consequences of the Russian-Ukrainian conflict: what awaits the Turkish economy?

Tensions between Russia and Ukraine could hamper the implementation of the Turkish president's new economic program, reducing revenues from the tourism sector, which is key to reducing the current account deficit. 

Russians accounted for 19% of foreign tourists visiting Turkey in 2021 (4.7 million people), while Ukraine was the third largest tourist flow state - 8.3% (2 million people). 

On Thursday, the Turkish lira has already fallen by 5% in its value, and the booking of Turkish hotels by Russians has decreased by 70%. According to Bulent Bulbuloglu, deputy head of the Turkish Hoteliers Federation, in a worst-case scenario, tourism revenues in the two countries could fall by $5-6 billion in 2022. 

At the same time, commodity prices jumped on Thursday as investors expected supply cuts due to sanctions on Russian exports, transport disruptions and Moscow's refusal to supply these types of goods.