Turkish Textile Industry Suffers As Ukraine, Russia Cancel Orders

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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 have cancelled US$ 200 million in orders in the past week, industry officials say.

The loss of trade adds to strains on Turkey’s economy, with officials estimating that more than US$ 1 billion is directly at 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 former rouble exchange rate. Otherwise they can’t make payments,” he said.

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After a raft of orders and contracts with Kyiv and Moscow in February, the industry reports cancellations worth around US$ 200 million, which could exceed US$ 1 billion if the situation continues.

Turkish trade with Belarus, Moldova and Romania has also cooled due to uncertainty, industry heads said. Some Polish customers asked to suspend orders, while some Russians asked to make payments based on foreign-exchange rates prior to the invasion and the collapse of the rouble. Turkey’s garments, textile and leather exports totalled US$ 718 million to Russia in 2021 and US$ 308 million to Ukraine, data shows.

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The estimated US$ 3 billion “suitcase 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 back home – has also taken a hit.

Many exporters have reported curtailing production for the new season.

Turkish President Tayyip Erdogan’s unorthodox economic plan aims to stabilise the lira currency by balancing the current account deficit. But given the Ukraine conflict, Goldman Sachs revised its forecast for this year’s deficit from 1.5% of GDP to 2.5%.

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