The Grand Bazaar in Istanbul sees fewer tourists
Turkish tourist arrivals mark biggest drop in 22 years
ISTANBUL, June 28, 2016
The number of foreign visitors to Turkey fell by more than a third in May, official data showed on Tuesday - the biggest drop in at least 22 years as tensions with Russia and a spate of bombings continues to hit tourist arrivals.
The decline signals more pain for Turkey's economy, hurt by slowing exports and weak private investment. Some economists have forecast that tourism revenue will drop by a quarter this year, costing around $8 billion, or the equivalent of 1 per cent of GDP.
The drop-off does not bode well for the rest of the May-August high tourism season, when European and Russian holidaymakers usually flock to Turkey's southern beaches. Turkey on Monday expressed regret to Russia over the downing of a warplane, a sign it is looking to improve relations that have hit the economy.
While that could help to revive Russian tourism, it is unlikely to woo back Europeans spooked by recent bomb attacks.
"If relations with Russia improve we may see a partial recovery in tourism, but there is no change on the European side," said Muammer Komurcuoglu, an economist at Istanbul brokerage Is Investment.
Tourism fell 34.7 per cent year-on-year in May, with 2.49 million people arriving during the month, data from the Tourism Ministry showed. It was the biggest drop on record, according to the data, which goes back to 1994.
The number of Russian visitors all but evaporated, falling by 91.8 per cent, the data showed. Russians traditionally account for one of the biggest groups of foreign visitors after Germany, but they have stopped coming after the shooting down of the Russian warplane over Syria last year.
The number of German tourists fell by 31.5 per cent, according to the data.
TRADE RESTRICTIONS
The Kremlin responded to the downing of the plane by slapping trade restrictions on Ankara, including freezing work on a pipeline to ship Russian gas to Europe via Turkey and advising Russian tourists to avoid Turkish resorts.
"Recent attempts to normalise relations with Russia might alleviate the pain in the sector to some extent and could trigger some last-minute reservations to Turkey, but hopes are saved for next year, in our view," said Ozgur Altug, chief economist at BGC Partners.
The pronounced drop in tourism is yet another headache for a government trying to win back investor confidence. Sentiment has been battered by security fears and worries about President Tayyip Erdogan's growing power.
Turkey has been hit by a wave of suicide bomb attacks this year, including two in Istanbul - its biggest city and traditional tourist draw - blamed on Islamic State militants. In January a suicide bomber killed 12 German tourists when he blew himself up in the city's historic heart.
Three Israeli tourists and an Iranian were killed in March when another suicide bomber blew himself up in Istanbul's most popular shopping district.
The NATO member faces multiple security threats. It is part of the US-led coalition fighting Islamic State in Syria and Iraq, and also battling the decades-old militant insurgency in the largely Kurdish southeast region.
The Turkish lira firmed to 2.9160 against the US dollar by 0824 GMT from 2.93 late on Monday.
Turkish stocks also gained, with the main share index rising 1.73 per cent to 76,463.38 points, outperforming its emerging market peers which were up 0.87 per cent.
The benchmark 10-year government bond yield fell to 9.38 per cent from 9.53 percent at Monday's close. - Reuters