Turkey's trade ban has had minimal impact on Israel's economy and prices, the Israeli central bank said in a report on Wednesday, citing the flexibility of the country's open economy.
Turkey severed trade with Israel last year over its war in Gaza with the Palestinian terrorist group Hamas and has remained an outspoken critic of Israel's policies.
Prior to the war, which was triggered by Hamas' attack on Israel on Oct. 7, 2023, Turkish exports to Israel totaled $5.3 billion in 2023, 6.3% of Israel's total imports, the Bank of Israel noted.
However, Turkey was an important importer of construction products such as cement, iron, and steel. Some 824,000 Israelis visited Turkey in 2022, the bank said, citing official Turkish statistics.
Israeli exports to Turkey were $1.5 billion in 2023, 2.5% of Israel's total exports.
Limited effects of Turkish embargo on Israel imports
"The Turkish embargo’s impact on imports and prices of imports to Israel was limited," the Bank of Israel said in its analysis. "This illustrates the importance of functioning markets and liberal trade policies in creating economic security, as well as the difficulty of individual countries to use trade restrictions on tradable goods as a political tool."
It added that Israel found substitutes for Turkish products that were halted and that alternate sources of cement came without higher prices even though most cement exports came from Turkey before the ban, underscoring "the limited impact of the embargo."
"Economic openness and the diversification of import sources - rather than isolation and domestic production - provided a solution to trade restrictions on tradable goods with a well-functioning international market," the central bank said.