Is Turkish economy emerging as a winner on the Middle East chessboard?

This article was originally written for Türkiye Today’s weekly economy newsletter, Turkish Economy in Brief, in its April 20 issue. Please make sure you are subscribed to the newsletter by clicking here.

The conflict that began in the Middle East in March eased with a “ceasefire” in the first week of April, and this positive momentum continued until the “reopening of the Strait of Hormuz” on the last trading day of last week. At this point:

• Brent crude, which had climbed as high as $119 per barrel during the war, closed last week at $92.40.
• Iran’s “conditional approval” of the reopening of Hormuz and developments suggesting that the U.S. would “continue its naval blockade against Iranian vessels in the region” stood out as signs of fragility.
• These fragilities became evident over the weekend. According to reports from the region, Iran began restricting passage through the Strait of Hormuz again, arguing that the U.S. naval blockade violates the ceasefire.
• Meanwhile, even if Hormuz fully reopens, it is noted that oil supply will not return to normal immediately due to damage to energy infrastructure, and this process could take months.
• Due to uncertainties around Hormuz, the ceasefire, and energy supply, oil prices returning to pre-war levels does not seem very likely in the short to medium term.

A natural-color satellite image captured by MODIS aboard NASA’s Terra satellite shows the Gulf of Oman, the Makran region in southern Iran and southwestern Pakistan, the Strait of Hormuz, and the northern coast of Oman, February 5, 2025. (AFP Photo)

A 'permanent ceasefire' this week?

Attention is now turning to a potential “permanent ceasefire” agreement between the U.S. and Iran.

The two sides are expected to meet again this week to negotiate unresolved issues. In such periods, markets tend to accept fragility as normal and prefer to remain “cautiously optimistic.”

This is because it had already become clear weeks ago that continued conflict would impose a high cost on the global economy, especially the U.S. For this reason, markets have been “pricing in optimism” since early April.

Over the past two weeks, the rise in oil prices has stalled, while global indices have resumed their upward trend.

What does this mean for Türkiye?

A decline in the Middle East risk premium holds particular importance for commodity-importing countries like Türkiye. Establishing a “lasting non-conflict environment” could gradually ease negative pressures on inflation, interest rates, the Turkish lira, the current account balance, and growth. Looking at recent signals from Turkish markets:

• The 2-year benchmark bond yield, which had risen above 42.5% during the war, has fallen back below 40%.
• The CDS risk premium dropped below 240, returning to pre-war levels.
• A strong recovery in reserves has resumed. The Central Bank of the Republic of Türkiye’s (CBRT) total reserves increased by $9.3 billion in the week ending April 10, reaching $170.9 billion.
• Foreign investors have also started returning. In the week ending April 10, they purchased $430.3 million in equities and $712.7 million in bonds.
• The Borsa Istanbul index rose by 14% in April (as of the April 17 close), reaching 14,588 points and setting a new record.
• All these developments can be said to strengthen the Central Bank’s hand. Attention is now also on the policy rate decision to be announced on Wednesday, April 22. The policy rate currently stands at 37%, while market funding is occurring at 40%, the upper band of the interest rate corridor. The Central Bank is likely to “hold” rates at this meeting, acknowledging improvements while also considering ongoing risks.

Line chart shows annual inflation and policy rates from May 2024 to March 2026. (Chart by Onur Erdogan/Türkiye Today)

Türkiye as a safe haven

Berk Dincturk, strategist at Istanbul Portfolio, also highlights Türkiye’s positioning and advantages in this new period. He argues that instability in the Middle East is pushing global capital, particularly Gulf capital, to seek safe havens:

“Foreign capital in the Gulf, where defense is weaker, may shift toward Türkiye due to its strong military structure and army. Expanding tax advantages at the Istanbul Financial Center could turn Türkiye into a critical attraction point for global capital seeking direction during wartime.”

Dincturk also notes that company valuations in Türkiye have remained relatively low over the past 2–3 years, offering a major opportunity window for foreign investors. Referring to interest from major funds like BlackRock, he adds:

“This indicates that Türkiye could be among the better-performing emerging markets this year.”

Watch these sectors

In the post-war reconstruction phase, several dynamics could bring certain sectors in Türkiye to the forefront:

• With its bridge position between East and West, Türkiye has strong advantages in port operations, logistics, storage, and air transportation.
• Continued declines in oil prices could particularly benefit the aviation sector.
• Türkiye’s image as a safe destination could make it more attractive for foreign tourists.
• During the rebuilding of Middle Eastern infrastructure, Turkish companies operating in telecommunications and contracting could secure large-scale projects.

Mehmet Simsek: There are opportunities

Let’s conclude this week’s piece with remarks from Treasury and Finance Minister Mehmet Simsek at the IMF–World Bank Spring Meetings panel titled “The Future of Economic Integration in a Fragmenting World”:

“Rather than simply reacting to events, we must act with foresight and well-designed strategies. One way to do this is by investing in new corridors and additional supply chains. We believe the Middle Corridor will be one of the most efficient options. We have strong ties with Europe and the West, while also actively engaging with the rest of the world.”

“This dual position makes Türkiye a natural risk diversification platform for its region. Therefore, we believe there are opportunities for us. Yes, the global economy is currently facing serious challenges, but we are looking beyond the short term and believe there will be many opportunities ahead.”

April 20, 2026 11:31 AM GMT+03:00