The Middle East conflict is raising risks for Turkey’s economy through higher energy and fertilizer prices, trade disruptions and tighter financial conditions, the European Bank for Reconstruction and Development (EBRD) said on Thursday, listing the country among the most exposed to the spillover effects of the conflict.
The EBRD said the conflict is expected to weigh on economic activity across its regions through higher energy and fertilizer prices, disruptions to trade and tourism flows and tighter financing conditions. It said Turkey is exposed because of its dependence on imported energy and its trade and financial links with Gulf economies.
The EBRD also said financial conditions have tightened, with bond yields rising in the southern and eastern Mediterranean and in Turkey. It said capital outflows from some economies, including Turkey, have so far remained manageable but could intensify if global financial conditions deteriorate further.
“The conflict shows how quickly geopolitical shocks can ripple through energy markets, supply chains and financial conditions,” EBRD Chief Economist Beata Javorcik said, adding that the effects could outlast the fighting itself. The bank said that if oil prices stay above $100 a barrel and supply chain disruptions persist, global growth could fall by at least 0.4 percentage points while inflation could rise by more than 1.5 percentage points.
The report also warned that disruptions to shipping routes in the Gulf could raise the cost of industrial inputs including aluminum, sulfur, helium, petrochemicals and plastics. It said economies that depend on tourism and remittances from Gulf countries also face added risks.
A separate policy brief from the Economic Policy Research Foundation of Türkiye (TEPAV) earlier said Gulf countries account for 15 to 25 percent of Turkey’s nitrogen-based fertilizer imports, warning that any disruption in the Strait of Hormuz could put pressure on fertilizer supply chains and raise costs for crops such as wheat, corn and sunflowers.
The other economies the EBRD identified as among the most exposed were Egypt, Iraq, Jordan, Kenya, Lebanon, Moldova, Mongolia, North Macedonia, Senegal, Tunisia and Ukraine.