Impact of Istanbul Attack on the Turkish Economy and Tourism

The explosion in Istanbul’s most prominent tourist attraction on the 12th of January is expected to impact negatively on inbound flow to Turkey on the short-to-medium term.

The blast took place at the Sultanahmet district, near the Blue Mosque and Hagia Sophia, major tourist spots for the destination, killing at least 10 people and wounding 15 others. The fact that the explosion occurred in the deep centre of Istanbul and that tourists from Germany and Norway were among the casualties is expected to result in further travel restrictions and flight banned towards the destination in the coming days. Indeed, major source European markets are very likely to take preventive measures so as to protect their citizens traveling to the popular outbound market.

Despite major media being blocked at the scene, the tourism industry in Turkey is predicted to suffer from the recurrent attacks on tourist spots those past years. The country was already on alert after 103 people were killed last October when two suicide bombers attacked a group of activists in Ankara. Visa allowances are also likely to get restricted and borders securities tightened as the operation was blamed on Islamic State. Kurdish splinter group, the Freedom Falcons of Kurdistan, as well as insurgents from PKK (separatist organisation seeking Kurdish autonomy) are also under watch since the freedom movement claimed responsibility for Istanbul second international airport attack last 23 of December.

The Turkish economy is suffering from the multiple attacks and geopolitics tensions in 2015. After reaching $35 billion in total tourism revenues in 2014, Turkey’s tourism profits fell by 4.4 % to $12.29 billion in the third quarter of 2015. Turkey was in 2014 the world’s sixth most attractive destination, with a record of 34.8 million visitors. Outbound figures started to decline after the EU imposed sanctions against Russia over the crisis in Ukraine in 2015, impacting on the Russian flow towards Turkey – 4.5 million Russian tourists visited Turkey annually until 2015. After the suicide bombing killing 32 people in the Turkish town of Suruc last July, nice countries including Germany and Russia issued travel restrictions to their citizens.

Euromonitor expects a slow economic and tourism rebound in the context of the virtual loss of Russian flow, volatility in Turkish markets and uncertainty in domestic politics combined with rising security concerns. Turkish lira lost about 30% of its value against the US dollar just in the first nine months of 2015.