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

Indicators in Russian are seen on the outlets in Laleli district, a garment district in Istanbul, Turkey, March 4, 2022. REUTERS/Dilara Senkaya

ISTANBUL, March 4 (Reuters) – Textile and leather-based items’ makers in Istanbul’s garment district are feeling the impression of Russia’s invasion of Ukraine as clients in Moscow and Kyiv have cancelled $200 million in orders up to now week, business officers say.

The lack of commerce provides to strains on Turkey’s economic system, with officers estimating that greater than $1 billion is straight in danger to the textile business alone if the battle in Ukraine continues.

Mustafa Senocak, head of the Istanbul Leather-based and Leather-based Merchandise Exporters Affiliation, stated orders for “tons of of hundreds of pairs of sneakers and hundreds of leather-based jackets” have been cancelled.

“Some Russians say they will pay with the previous rouble change charge. In any other case they cannot make funds,” he stated.

Russia and Ukraine accounted for greater than $1 billion in Turkish exports of leather-based sneakers, jackets and completed and unfinished clothes final yr, and almost 3 times that a lot within the unofficial “suitcase commerce” centred in Istanbul, officers say.

The hit to commerce places additional stress on Turkey’s economic system after a foreign money disaster in December and ensuing inflationary spiral. Falling export revenue provides to the Turkish present account deficit, which is swelling following Russia’s invasion of Ukraine final week attributable to hovering power costs and an anticipated hit to tourism this yr. learn extra

After a raft of orders and contracts with Kyiv and Moscow in February, “we face cancellations… value round $200 million thus far (for the business),” stated Seref Fayat, head of garment maker TOBB Clothes and Attire Trade Meeting. “It may exceed $1 billion if this case continues.”

Turkish commerce with Belarus, Moldova and Romania has additionally cooled attributable to uncertainty, business heads advised Reuters. Some Polish clients requested to droop orders, whereas some Russians requested to make funds primarily based on foreign-exchange charges previous to the invasion and the collapse of the rouble.

Turkey’s clothes, textile and leather-based exports totalled $718 million to Russia in 2021 and $308 million to Ukraine, information reveals.

The estimated $3 billion “suitcase commerce” – wherein small retailers from Russia, Ukraine and different former Soviet states purchase items in Istanbul, pack them in empty suitcases and resell them again residence – has additionally taken successful.

“We had already began manufacturing for the brand new season – however now now we have all stopped,” stated Giyasettin Eyyupkoca, head of the Affiliation of Industrialists and Enterprise Individuals of Laleli, the Istanbul district on the centre of the suitcase commerce.

Turkish President Tayyip Erdogan’s unorthodox financial plan goals to stabilise the lira foreign money by balancing the present account deficit. However given the Ukraine battle, Goldman Sachs revised its forecast for this yr’s deficit from 1.5% of GDP to 2.5%.

Russians and Ukrainians drive half of Laleli’s annual commerce quantity, Eyyupkoca stated. “I’ve had the identical Ukrainian buying and selling companion for years and an open account with him. How can I now ask him to pay me cash whereas he’s struggling to remain alive?”

Writing by Ceyda Caglayan; Enhancing by Jonathan Spicer and Susan Fenton

: The Thomson Reuters Trust Principles.