Turkish textile industry suffers as customers in Ukraine and Russia cancel orders

© . Signs in Russian are seen in shops in Laleli district, a clothing district in Istanbul, Turkey, March 4, 2022. REUTERS/Dilara Senkaya By Ceyda Caglayan ISTANBUL () – Textile and leather goods makers feel in Istanbul’s clothing district the impact of Russia’s invasion of Ukraine as customers in Moscow and Kiev canceled $200 million worth of orders in the past week, industry officials say. The loss of trade is putting additional pressure on Turkey’s economy, with officials estimating that more than $1 billion is at immediate risk to the textile industry alone if the conflict in Ukraine continues. Mustafa Senocak, head of the Istanbul Leather and Leather Products Exporters Association, said 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 exchange rate of the ruble. Otherwise they can’t pay,” he said. Russia and Ukraine accounted for more than $1 billion in Turkish exports of leather shoes, jackets and finished and unfinished clothing last year, and nearly triple that in Istanbul’s unofficial “suitcase trade,” officials say. The blow to trade is putting further pressure on the Turkish economy after a currency crisis in December and the ensuing inflation spiral. Falling export earnings are contributing to Turkey’s current account deficit, which is widening after Russia’s invasion of Ukraine last week due to rising energy prices and an expected blow to tourism this year. Following a string of orders and contracts with Kiev and Moscow in February, “we are facing cancellations…worth about $200 million (to the industry) so far,” said Seref Fayat, head of apparel maker TOBB Clothing and Apparel Industry. Assembly. “If this situation continues, it could exceed $1 billion.” Turkish trade with Belarus, Moldova and Romania has also cooled amid uncertainty, industry heads told . Some Polish customers asked for orders to be suspended, while some Russians asked for payments to be made based on exchange rates prior to the invasion and the ruble’s collapse. Turkish clothing, textile and leather exports totaled $718 million to Russia and $308 million to Ukraine in 2021, data shows. The estimated $3 billion “luggage trade” — in which small merchants from Russia, Ukraine and other former Soviet states buy goods in Istanbul, pack them in empty suitcases, and resell them at home — has also taken a hit. “We had already started production for the new season, but now we have all stopped,” said Giyasettin Eyyupkoca, head of the Association of Industrialists and Business People of Laleli, the district in Istanbul that is the center of the suitcase trade. Turkish President Tayyip Erdogan’s unorthodox economic plan aims to stabilize the lira by offsetting the current account deficit. But given the conflict in Ukraine, Goldman Sachs (NYSE:) has revised its deficit forecast for this year from 1.5% of GDP to 2.5%. Russians and Ukrainians are responsible for half of Laleli’s annual trade volume, Eyyupkoca said. “I have had the same Ukrainian trading partner and an open account with him for years. How can I ask him to pay me money while he is struggling to stay alive?” Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media assumes no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts, and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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