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Israel's open economic system offsets Turkish trade ban, says central bank

Israel's open economic system offsets Turkish trade ban, says central bank

The Israeli central bank reported on Wednesday that the trade ban imposed by Turkey had a minimal impact on Israel’s economy and prices. It cited the country’s flexible economy.

The Turkish government cut off trade with Israel in 2011 over the conflict between Hamas, a Palestinian militant group, and Israel. It has been a vocal critic of Israel’s policies ever since.

Bank of Israel reported that before the war, which began after Hamas attacked Israel on October 7, 2023 the Turkish exports to Israel amounted to $5.3 billion, or 6.3% of Israel’s total imports.

Turkey is a major importer of construction materials such as iron and steel, as well as cement. The bank cited official Turkish statistics to say that 824,000 Israelis will visit Turkey in 2022.

In 2023, Israeli exports to Turkey will be $1.5 billion or 2.5% of Israel’s total exports.

In its analysis, the Bank of Israel stated that "the Turkish embargo had a limited impact on imports or prices of imports into Israel." This shows the importance of free markets and liberal policies for economic security. It also illustrates how difficult it is for individual countries to use trade restrictions as a tool of political influence.

The report also noted that Israel had found alternatives to Turkish products, and that alternative sources of cement were available without higher prices, even though the majority of cement exports originated from Turkey prior to the ban. This highlights "the limited effect of the embargo."

The central bank stated that "economic openness and diversification of imports - instead of isolation and domestic production -- provided a solution for trade restrictions on tradable products with a functioning international market." (Reporting and editing by Toby Chopra; Steven Scheer)

(source: Reuters)