Possible Effects of the War on Turkey’s Economy
Gökhan Işıl, Lecturer at Marmara University Faculty of Financial Sciences, Department of Banking, evaluated the potential impacts of the war between Israel, the United States, and Iran on the Turkish economy.
Işıl stated that the most fundamental effect of the war would be to increase costs through oil and freight prices, thereby creating inflationary pressure. According to him, if the war lasts longer, production contractions will be inevitable. While China is not directly affected by oil supply disruptions in the Strait of Hormuz at the moment, reduced production in its export markets will negatively impact China’s own exports and manufacturing. A contraction in European production, meanwhile, would directly challenge Turkey’s exports. In addition, the appreciation of the U.S. dollar and the possibility of interest rate hikes in Europe could suppress consumption, further harming Turkey’s export performance.
Assuming the rise in oil prices is temporary, Işıl forecasted that prices would stabilize at around 70–80 dollars per barrel after June. In this scenario, stock markets and gold prices would follow a volatile course. However, if the war drags on, he emphasized that a potential Federal Reserve interest rate hike could negatively affect not only stock markets but also gold and silver prices.
On inflation, Işıl projected that short-term fluctuations in oil prices would keep Turkey’s year-end inflation for 2026 at around 27.6%. Yet, if the war lasts longer than three months, he warned that the disinflation process could be disrupted.
Commenting on the Central Bank’s decision to keep its policy rate unchanged, Işıl said:
“Volatility in oil prices and global inflationary pressures have forced the Central Bank to act cautiously. Strategic reserves will help ease oil price fluctuations for about 90 days, but if the war continues, additional tightening measures may come onto the agenda.”
