One year into Russia’s Ukraine invasion, Turkish contractors have seen their business volumes plunge in the markets where they used to run billions of dollars worth of projects every year.
The builders undertook some $18.7 billion worth of projects abroad in 2022, according to Trade Ministry data, down from the recent years’ annual average of $20 billion and a record $30.7 billion in 2021.
Contractors found themselves in a tight spot with fears over the swings from Russia’s war in Ukraine, which added to troubles that pushed economies to the brink of recession and disrupted markets around the world, from energy and food prices.
Türkiye engaged in a balancing act, maintaining good relations with both Russia and Ukraine, and has tried to steer a middle course between the two combatants.
Türkiye has criticized Moscow’s invasion and provided Ukraine with drones, which played a significant role in deterring a Russian advance early in the conflict while refusing to join the West in imposing sanctions on Russia – a stance that has helped its mediation efforts reap results.
Both Russia and Ukraine have for years accounted for a vast part of Turkish builders’ projects abroad.
Russia ranks first and holds a 20.7% share in all the projects the industry has undertaken since its opening abroad in 1972, according to the Trade Ministry data.
Despite the war, it remained the most important market in 2022 and accounted for 11.3% of contractors’ new projects in foreign markets.
The business volume that the industry undertook in Russia stood at around $4.59 billion in 2020, before rocketing to more than $11 billion in 2021. The figure shrunk to just $2.34 billion last year, the data showed.
In contrast, the volume in Ukraine amounted to some $724 million in 2020 and hit $1.66 billion a year later. The war delivered major losses as the figure dropped to $586.6 million, according to the data.
What’s more, Turkish contractors have had around $4 billion worth of deals undertaken before the war completely halted after Moscow launched what it called a “special military operation” on Feb. 24.
The invasion prompted around 1,000 site workers and their families to return to Türkiye.
President Recep Tayyip Erdoğan, in mid-August last year, pledged to support the war-torn country in reconstructing its infrastructure, which has been devastated by the Russian invasion.
This was reaffirmed by an agreement signed during Erdoğan’s first trip to Kyiv since the war began. The deal foresees a formation of a joint working group that will coordinate work to rebuild facilities of social and economic importance, including roads, bridges, water and electricity infrastructure, hospitals and schools.
Meanwhile, Turkish builders have also shifted focus to other markets, spearheaded by the Gulf countries, to try to make up for the losses.
The industry has also ramped up efforts to strengthen its presence in Iraq and expects to achieve noteworthy progress with the new government.
Talks with the United Arab Emirates (UAE) and Saudi Arabia have also gained pace. The latter particularly holds great potential, given the fact it plans to build projects worth $3.3 trillion over the next 10 years.
Among others, focus has also been shifted to Sub-Saharan Africa, the Far East and Latin America, which the industry also sees as carrying significant potential.
