The Iran War’s Economic Shockwaves Hit Turkey

As missiles crossed the skies of the Middle East and fears mounted over the security of the Strait of Hormuz, the economic shockwaves of the Iran war quickly reached Turkey.

For Ankara, the danger lies not in direct military confrontation, but in the vulnerability of an economy deeply dependent on imported energy, foreign capital, tourism revenues, and regional trade routes. In this context, the economic shockwaves of the Iran war quickly reached Turkey through many of these interlinked vulnerabilities.

At a moment when Turkish authorities were struggling to bring inflation under control after years of currency crises and monetary turbulence, the war injected a new layer of uncertainty into fuel prices, transport costs, investor confidence, and the value of the lira. The result is a mounting economic pressure that threatens to slow growth, widen the current account deficit, and prolong one of the most difficult stabilization periods in Turkey’s modern economic history. Furthermore, the economic shockwaves of the Iran war quickly reached Turkey in the form of these escalating pressures.

Turkey is a large net energy importer, and this makes every sustained rise in oil and gas prices a direct macroeconomic problem. Although Turkey does not receive most of its oil through the Strait of Hormuz, global prices are set in global markets; therefore, a disruption in Gulf supply raises Turkey’s import bill, fuel costs and production costs.

Turkey entered the war period with fragile disinflation. OECD data showed annual inflation still at 32.9% in October 2025, despite falling from 37.9% in April. The war then reversed part of that progress. In April 2026, Turkish monthly inflation jumped to 4.18%, while annual inflation rose to 32.37%, above forecasts. Transport prices have risen 4.29% in one month, food and drink 3.7%, housing 7.99%, and clothing and footwear 8.94%.

The Central Bank of Turkey is therefore trapped between two risks. If it keeps rates low, the lira and inflation expectations may weaken; if it tightens further, growth and credit conditions suffer. The bank held its key rate at 37% in April 2026, but the effective overnight funding rate had been pushed close to 40%, and the bank was monitoring second-round effects from the war. This means the Iran war has already delayed monetary normalization. Notably, the economic shockwaves of the Iran war quickly reached Turkey and began affecting monetary policy as well.

Turkey’s external balance is highly sensitive to energy. Before the shock, official Turkish data showed that the current account was already negative, while the balance excluding gold and energy was strongly positive; a clear sign that energy imports are the key structural burden. The Treasury and Finance Ministry’s data showed a 12-month rolling current account deficit of about $22 billion, while the current account excluding gold and energy was in surplus by about $46 billion. Fitch warned that a prolonged Iran conflict would widen Turkey’s current account deficit and complicate disinflation “mainly due to its sizeable energy trade deficit.” Indeed, the economic shockwaves of the Iran war quickly reached Turkey’s trade and energy balances.

Trade data reinforce the same vulnerability. In December 2025 alone, Turkey’s imports reached $35.8 billion while exports were $26.4 billion, producing a monthly trade deficit of $9.4 billion. Any oil-price shock widens this gap unless exports rise equally fast, which is unlikely during a regional war that also weakens demand, raises freight costs and creates uncertainty in nearby markets.

Tourism decline doubles the losses. In 2025, Turkey earned a record $65.23 billion from tourism, up 6.8%, with more than 63.9 million visitors. That made tourism one of the country’s most important sources of foreign currency. But war undermines this channel whereas Turkey’s tourism sector expected a difficult season, with some hotels cutting prices by 20–25% to maintain occupancy, while the government’s $68 billion tourism target for 2026 became harder to reach.

Iran itself is not large enough as a trade partner to break Turkey’s economy, but the bilateral channel still matters regionally. Turkish and Iranian data put Turkey-Iran trade at roughly $5–5.5 billion in 2025, with Turkish exports around $3 billion and imports around $2.5 billion, much of the import side linked to natural gas. Border disruptions, payment risks, sanctions exposure and insurance costs can therefore damage eastern Turkish exporters, logistics firms and energy flows even if the national effect is smaller than the oil-price channel.

The deeper danger is that all these channels reinforce one another. Higher oil prices raise inflation; higher inflation forces tighter monetary policy; tighter policy slows domestic demand; slower tourism reduces foreign-currency inflows; a wider current account deficit pressures the lira; a weaker lira then raises the local-currency cost of imports, restarting the inflation cycle. This is why the Iran war is economically catastrophic for Turkey even without direct military involvement.