The recent decision by Turkey to halt all trade with Israel is sending shockwaves throughout various sectors of the Israeli economy. The Turkish trade ministry made this announcement in response to a demand for increased humanitarian aid flow to Gaza, cutting off imports of crucial goods such as iron, steel, construction materials, machinery, and more.
The construction industry, for example, heavily relied on Turkish iron, steel, and building materials, with Turkey supplying a significant portion of Israel’s cement imports. This sudden restriction could lead to a spike in property and rent prices, a concern raised by Israeli businesses last month.
On top of this, Israel’s largest oil refinery, Bezan, is bracing for potential disruptions in crude oil imports. A substantial portion of Israel’s oil consumption comes through Turkey, making this ban particularly impactful.
The electrical products industry is also feeling the pressure, as a ban on Turkish imports could lead to a significant price hike, given that a majority of Israel’s domestic electrical goods are sourced from Turkey.
Importers now face the challenge of finding alternative routes and sources for their imports, potentially incurring higher costs due to tensions in the Red Sea affecting shipping routes.
‘Dire straits’
In April, the contractors’ association penned a letter to Israeli officials expressing concerns about the construction sector’s collapse. Labour shortages and war-related issues have already strained the industry, prompting the need for urgent diversification of import sources.
Despite the economic impact, Israel remains resilient, exploring options to replace Turkish imports with local products or goods from other countries, as highlighted by Foreign Minister Israel Katz.