Turkey’s textile industry suffers as customers in Ukraine and Russia cancel orders – Middle East Monitor
Textile and leather goods makers in Istanbul’s garment district are feeling the impact of Russia’s invasion of Ukraine as customers in Moscow and Kyiv canceled $200 million orders last week , according to industry officials, and Reuters reports.
The loss of trade is adding to strains on Turkey’s economy, with officials estimating that more than $1 billion is directly at risk from the textile industry alone if the conflict in Ukraine continues.
Mustafa Senocak, head of Istanbul Leather and Leather Products Exporters Associationsaid orders for “hundreds of thousands of pairs of shoes and thousands of leather jackets” have been cancelled.
“Some Russians say they can pay with the old ruble exchange rate. Otherwise they cannot make payments,” he said.
Russia and Ukraine accounted for more than $1 billion in Turkish exports of leather shoes, jackets and finished and unfinished garments last year, and almost three times as much in the “suitcase trade unofficial centered in Istanbul, officials say.
The blow to trade puts additional pressure on the Turkish economy after a currency crisis in December and the resulting inflationary spiral. The drop in export earnings comes on top of Turkey’s current account deficit, which swells after Russia invaded Ukraine last week, due to soaring energy prices and an impact expected on tourism this year.
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After a series of orders and contracts with Kyiv and Moscow in February, “we are facing cancellations…worth about $200 million so far (for the industry),” said Seref Fayat, Apparel Manufacturer Manager, TOBB Clothing and Apparel Industry Assembly. “It could exceed $1 billion if this situation continues.”
Turkish trade with Belarus, Moldova and Romania has also cooled due to uncertainty, business leaders said Reuters. Some Polish customers asked to suspend orders, while some Russians asked to make payments based on exchange rates before the invasion and the collapse of the ruble.
Turkish exports of garments, textiles and leather totaled $718 million to Russia in 2021 and $308 million to Ukraine, the data shows.
The estimated $3 billion “suitcase trade” – in which small traders from Russia, Ukraine and other former Soviet states buy goods in Istanbul, pack them into empty suitcases and resell them back home – has also took a hit.
“We had already started manufacturing for the new season – but now we have all stopped,” said Giyasettin Eyyupkoca, head of the Association of Industrialists and Businessmen in Laleli, Istanbul’s commercial hub district. suitcases.
Turkish President Tayyip Erdogan’s unorthodox economic plan aims to stabilize the pound by balancing the current account deficit. But given the conflict in Ukraine, Goldman Sachs has revised its forecast for this year’s deficit from 1.5% of GDP to 2.5%.
Russians and Ukrainians generate half of Laleli’s annual trade volume, Eyyupkoca said. “I have the same Ukrainian business partner for years and an open account with him. How can I now ask him to pay me money, while he is struggling to stay alive?”
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