The Bank of Israel published a box from its forthcoming Annual Report for 2024 assessing the economic impact of Türkiye’s April to May 2024 embargo on exports to Israel. It concludes that market adjustment, including substitution toward alternative suppliers and continued trade via third economies, mitigated the effect on Israel’s activity and prices despite a material hit to bilateral trade flows. Before the embargo, Türkiye accounted for about USD 5.3 billion of Israel’s imports in 2023 (around 6.3 percent), including USD 4.6 billion purchased directly and at least USD 660 million via third countries, with particularly large shares in construction and production inputs; exports to Türkiye were comparatively small at about USD 1.5 billion (around 2.5 percent of goods exports). After Türkiye first restricted 54 goods in April 2024 and then banned all trade from early May, Israeli exports to Türkiye ceased from May and total 2024 exports to Türkiye were around USD 1 billion lower than in 2023, while imports of Turkish products fell from about USD 550 million per month early in 2024 to roughly USD 100–200 million per month by year-end. The analysis attributes gaps between Israeli and Turkish trade statistics mainly to re-routing through third economies, including shipments to the Palestinian Authority, and estimates only modest price effects: production input import prices and the residential construction input index rose by about 0.6–0.7 percentage points, offset by declines in other imported goods, with the overall import price index slightly lower in the third quarter. A specific focus is cement, where imports from Türkiye reportedly ceased despite Türkiye previously supplying about 45 percent of cement used in Israel, yet alternative sources were secured and total cement imports increased in the second half of 2024 without a noticeable rise in cement prices. The box presents the episode as a case study highlighting the role of trade openness and diversified sourcing in limiting the impact of targeted trade restrictions.
Bank of Israel 2025-03-19
Bank of Israel analysis finds Turkish embargo cut 2024 exports to Türkiye by about USD 1 billion with limited impact on import prices
The Bank of Israel's 2024 Annual Report assesses the economic impact of Türkiye's export embargo on Israel, concluding that market adjustments and alternative sourcing mitigated effects on Israel's economy despite a significant reduction in bilateral trade. The report highlights that while imports from Türkiye fell sharply, the overall impact on prices was modest due to diversified sourcing, particularly in sectors like cement.