As Turkey relies on foreign currency inflows from visitors to finance its foreign debt and a current account deficit that stands at 5 per cent of gross domestic product, a collapse in tourism would ripple out to the wider economy.
Tourist cash has become even more critical since President Recep Tayyip Erdogan fired the central bank governor in March, propelling foreign investors to dump a net $1.8bn of Turkish stocks and bonds.
Income from tourism also reduces Turkey’s trade deficit and underpins the lira, which has lost 14 per cent of its value this year as concern grew that Erdogan’s pressure on the central bank to cut interest rates was fueling double-digit inflation.
According to reports, Turkey’s visitor numbers and revenue plunged nearly 70 per cent in 2020 on the previous year. The tourism ministry had targeted 30m tourists and $23bn in revenue in 2021, but this may already be slipping out of reach, with a few tourists arriving in the first four months than in the same period last year.
Not one tourist has booked a single reservation from Britain this season or from Germany which sent 5m tourists to Turkey in 2019. Russia, Turkey’s biggest source of tourists, has cancelled most flights between the two countries.
After the downing of a Russian fighter jet by Turkish armed forces on the Syrian border in November 2015, the Kremlin announced a package of economic sanctions including an end to charter flights between the two countries, denying Turkey more than 3 million Russian tourists annually.
In Marmaris, nine out of 10 hotels remained shut in late May. Most survived the 2020 collapse through loans or cost-cutting but now it’s time to pay up, and if things unfold like last year, many operators will go bankrupt or be forced to sell”, Turkish hotelier said .
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