Türkiye's goods exchange with Israel has plunged nearly 50% since the start of the unprecedented Israeli military campaign on the Gaza Strip in early October, a senior official said Wednesday.

Israel has been conducting indiscriminate air and ground attacks in Gaza since Oct. 7 in response to a cross-border attack by the Palestinian resistance group Hamas. It has turned vast areas into ruins and killed at least 21,000 Palestinians, mostly women and children, and injured over 55,000 others, according to local health authorities.

Türkiye, which supports a two-state solution to the decades-old conflict, has called Israel a "terror state" committing war crimes and violating international law in the Palestinian enclave.

Prior to the conflict, Türkiye and Israel had ramped up diplomatic contacts to repair long-strained ties but halted all engagements since October. Throughout the years of tensions, the countries maintained trade links, which remained at high levels and even hit a record last year.

However, their bilateral exchange, which stood at $8.91 billion in 2022, has been nosediving after the start of the latest conflict.

Trade Minister Ömer Bolat on Wednesday said Türkiye's exports to Israel fell approximately 40%, while imports sank around 54% since early October.

Türkiye's shipments to Israel this October alone dropped by almost 30% to some $348 million, compared to about $489 million a year ago, according to the Turkish Statistical Institute (TurkStat).

Shipments in the first 10 months are down more than 20% to nearly $4.7 billion, versus $5.8 billion in the same period of 2022, the data showed.

Imports from Israel plunged to just $98.7 million in October, from nearly $241 million a year ago, and to about $1.93 billion in the first 10 months, down from $2.45 billion in 2022.

Exports amounted to some $6.7 billion last year, compared to imports of about $2.2 billion, according to official data. Bilateral trade totaled $8.4 billion in 2021, up from $6.2 billion in 2020.

Bolat expressed concern over the circulation of trade-related images with Israel, stressing that many were disseminated by the Israeli media or their intelligence.

He emphasized the sensitivity of Turkish companies and the public toward Israeli products. "We have curtailed trade. The crucial point is to save and uplift the lives of Palestinians in the region," the minister told the private broadcaster NTV.

Highlighting the demographic composition, Bolat mentioned that there are 8 million Palestinians and 7.15 million Israelis in the regions under Israeli control. He underscored that goods destined for those areas were required to be labeled as "Israel."

Contrary to misconceptions, Bolat clarified that the existing trade with Israel has been primarily made by international private companies, not state enterprises. He specified that approximately 32% of Türkiye's exports to Israel are conducted by international firms directly investing in Türkiye.

Annual exports goal achieved

Meanwhile, Bolat also said Türkiye had achieved the export target set for this year in the government's medium-term program (MTP), which was unveiled in early September.

He did not disclose specific figures and said President Recep Tayyip Erdoğan would announce them next week.

The MTP export estimates were set at $255 billion for 2023, which would mark Türkiye's best annual sales to foreign markets ever, and $267 billion for 2024.

Outbound shipments hit nearly $233 billion from January through November this year, increasing by 0.7% from last year. Imports rose 0.5% to $332.8 billion.

The 12-month rolling exports reached $255.8 billion, marking a 0.9% increase, according to official data.

Exports reached over $254 billion in 2022, lifting the previous all-time high of nearly $225.4 billion in 2021. Sales were hit by the pandemic and dropped to as low as $169.5 billion in 2020.

Bolat recalled a $6.5 billion loss in exports due to the devastating earthquakes in early February, which ripped through southeastern Türkiye, killing over 50,000 people, leveling hundreds of thousands of buildings and severely damaging the infrastructure.

Türkiye also made what Bolat said was a "sacrifice" of nearly $2 billion in agricultural exports to prevent food price increases.

Bolat acknowledged the challenging global trade landscape this year, citing sluggish global production, particularly in the European Union and a decline in global demand.

Despite these adverse factors, he asserted, "We closed the gap with second-half initiatives and reached the MTP target. We achieved the highest monthly export figures in history in the last six months."

Türkiye has embraced more conventional policymaking after the May elections and delivered aggressive monetary tightening aimed at arresting soaring inflation, reducing trade deficits, rebuilding foreign exchange reserves and stabilizing the Turkish lira.

Since June, the central bank has lifted its one-week repo rate by 3,400 basis points to 42.5%. Last week, the bank suggested it was closer to the finish line by saying it expects to "complete the tightening cycle as soon as possible."

The rate has led to much higher costs for mortgages, auto loans, business borrowing and many other forms of credit.

The monetary authority expects inflation to rise from nearly 62% last month to 70%-75% in May before dipping to about 36% by the end of next year as tightening cools prices.

Addressing the decrease in the trade deficit over the past four months, Bolat anticipated a reduction in the current account deficit to approximately $40 billion in November-December.

"When the exchange rate stabilizes, the increase in inflation through price reflection will be prevented," the minister said.

Bolat did not specify the timeframe for the current account deficit forecast. For January-October, the shortfall stood at $40.7 billion, and on a 12-month basis, it reached $50.7 billion in October.