Turkey’s outlook sours after Russia invades Ukraine

Turkey will take a hit from the Russian invasion of Ukraine through three main channels – tourism, energy prices and financial market disruption – all of which will put further stress on price and financial stability. Altogether, we estimate the impact may shave 0.4ppts from our 2022 growth forecast of 2.5% for Turkey.

What you will learn:

• The biggest impact will be on tourism – in 2021 arrivals from Russia accounted for 19% of the total and Ukraine 8.3% – adding to Turkey’s external vulnerability.
• The surge in energy prices will further squeeze household incomes via higher import costs, with the lira vulnerable, and inflation, which is already at a two-decade high of nearly 50%.
• We do not anticipate Russia’s energy supply to Turkey to be interrupted.