Levent Gürses
Hopes had dimmed following the failure of US-Iran ceasefire talks in Islamabad, Pakistan’s capital, to reach an agreement last weekend and the US’s announcement that it would impose a blockade on the Strait of Hormuz. However, growing optimism surrounding talks aimed at securing a permanent ceasefire during the week had a highly positive impact on the markets.
Wall Street broke one of its all-time records, whilst oil prices plummeted; the price per barrel fell below $100 again, even dipping below $95 at one point. Gold prices rose; the price per ounce reached as high as $4,800, and even copper prices—often referred to as the barometer of the global economy—increased.
And all this is happening despite experts’ warnings that ‘we are entering the biggest energy crisis in history’. Despite there being no sign of a ceasefire and no discussion of a time or place for negotiations to resume, positive messages are emerging and there seems to be a spring-like atmosphere in the markets.
The greatest energy crisis in history will be long and costly to resolve
Yet it is noted that the greatest global energy crisis in history has only just begun, and the process of emerging from the crisis will be long and costly. A temporary ceasefire will not enable us to return to the pre-war era of cheap oil and natural gas.
According to BBC Turkish, there are six reasons for this. Most importantly, the oil shortage is only just beginning. Fatih Birol, Executive Director of the International Energy Agency (IEA), says, “April will be far worse than March. Even by the most conservative estimates, the supply shortfall will double.”
It takes one to one and a half months for an oil tanker carrying oil from the Persian Gulf to reach buyers, and the war began exactly one and a half months ago. As the Strait of Hormuz has effectively remained closed during this period, the world is only just beginning to face a shortage of oil supply.
Even if the Strait of Hormuz were to open, under ideal conditions, it could take one to one and a half months for supply to recover. However, the US Department of Energy’s statistical unit has forecast that the oil shortage will persist until the end of 2026.
The natural gas crisis is worse than the oil shock
The second reason is the expectation that the natural gas crisis will be worse than the oil crisis… Because it will not be possible to quickly restore liquefied natural gas supplies to their previous levels, and there is no alternative route for shipments from Qatar by sea. Furthermore, the future is uncertain, and this will keep gas prices high in the coming months. The third reason is that repairs to the damage at facilities in the Middle East, particularly in Qatar, will take months… According to the IEA, over 40 oil and gas facilities in Middle Eastern countries were damaged during the war.
Even if the Strait of Hormuz reopens, it is not the end of the tunnel; the global energy system is being rebuilt from scratch
Fatih Birol’s words are highly cautionary: “Do not assume we have reached the end of the tunnel even if the Strait of Hormuz were to open tomorrow. Following the two oil crises of the 1970s, many developing countries became mired in external debt. Economic and social consequences ensued. April could be the month such a process begins. The global energy system could be reshaped.
We may witness significant changes and leaps,” he said.
IEA Director: Return to pre-crisis levels could take up to two years
IEA Director Fatih Birol made a series of significant statements last week. He said that the rising oil prices following the conflicts in the Middle East “do not reflect the seriousness of the problem” and that there is a “disconnect” between market perception and the realities on the ground.
Birol noted that his analyses indicated a return to pre-crisis levels could take up to two years. Referring to the disruption in energy flows caused by the closure of the Strait of Hormuz following the outbreak of conflicts in the Middle East, Birol described this as “the greatest energy security threat in history.”
Comparing recent events to past energy crises, Birol explained that the oil crises of 1973 and 1979 each resulted in a daily loss of approximately 5 million barrels of supply, leading to recessions, high inflation and debt problems in many countries, particularly in some developing nations. Birol noted that the current daily supply loss has reached 13 million barrels, highlighting that this loss exceeds that of past crises.
Let’s first look at the developments and market reactions:
US President Donald Trump stated on Thursday, 16 April, that talks with Iranian officials could resume this weekend, saying, “We are very close to reaching an agreement with Iran.” Announcing that Lebanon and Israel had reached an agreement on a 10-day ceasefire and stating that hostilities would resume if no agreement were reached with Iran, Trump said, “Iran has very clearly accepted that it will not possess nuclear weapons. They have also agreed to hand over the nuclear materials underground to us.”
An Iranian official also raised hopes by stating, “Hopes for extending the ceasefire have increased,” whilst attention turned to a broader agreement that could reopen the Strait of Hormuz… It is reported that the Iranian side has proposed that, should an agreement be reached to prevent the outbreak of hostilities with the US, they would permit ships to pass through the Strait of Hormuz via Oman.
According to the Wall Street Journal, following the failure of the first round of talks held in Pakistan over the weekend to produce an agreement, Washington and Tehran have, in principle, agreed to hold new talks; however, it was reported that neither side has yet set a time or place for the meeting.
Oil prices are falling, stock markets are rising
Although there is still no official ceasefire agreement and no talks have even been resumed, oil prices have fallen below $100 per barrel. In particular, whilst the US naval blockade of Iranian ports continues and despite a senior Iranian commander warning Washington against continuing the blockade, it was claimed last week that some ships had passed through the Strait of Hormuz. Reuters also reported that Iran might consider allowing ships to sail freely on the Omani side of the strait without the risk of attack as part of a peace agreement.
For these reasons, crude oil prices have experienced sharp falls, and hopes that US-Iran tensions will ease have largely prevented any potential rise.
Wall Street is responding positively to these reports, bolstered by technology companies’ positive quarterly results. The S&P 500 and the technology-heavy Nasdaq indices had reached record levels. Beyond the US, Japan’s Nikkei 225 index also hit an all-time high.
Griffin: If the Strait of Hormuz remains closed, a global recession is inevitable
Ken Griffin, the billionaire investor and owner of the world’s largest hedge fund, has warned that the world could face a global recession if the Strait of Hormuz remains closed for an extended period. Speaking at the Semafor World Economy Forum, Griffin stated: “This is truly a very, very dangerous moment for the global economy. From a macroeconomic perspective, the key criterion is the resumption of an uninterrupted flow of energy products from the Middle East, and this must occur without transit fees or harassment.”
Griffin added, “If the Strait of Hormuz remains effectively closed for the next 6 to 12 months, the world will face a recession.”
HSBC: The war in Iran is undermining confidence in the global economy
Georges Elhedery, CEO of HSBC Bank, stated that the effects of the war in Iran on the global economy are beginning to be felt, adding that rising uncertainty is eroding confidence in the business world. The bank’s CEO emphasised that uncertainty regarding the duration of the conflict is affecting not only the Middle East but also the global economy. HSBC Chairman Brendan Nelson also said that rising energy costs have become one of the biggest risks to the global economy. According to Nelson, the rise in energy prices is fuelling inflation whilst simultaneously stifling economic growth.
IMF cuts Turkey’s growth forecast from 4.2% to 3.4%
As expected, the war in the Middle East has led to a revision of growth forecasts. The International Monetary Fund (IMF) has lowered its growth forecast for Turkey this year from 4.2 per cent to 3.4 per cent. Inflation is projected to reach 28.6 per cent by the end of 2026 and 21.4 per cent in 2027. A downward revision of 0.2 percentage points was also made for global growth.
The April edition of the World Economic Outlook report was published on the occasion of the IMF and World Bank’s annual Spring Meetings in April, emphasising that the global economy once again faces the threat of veering off course due to the war. It was reported that the pace of global economic growth is expected to slow from 3.4 per cent in 2025 to 3.1 per cent in 2026, and to reach 3.2 per cent in 2027. Compared to the January forecast, this represents a downward revision of 0.2 percentage points for this year. The report noted that global economic growth is expected to remain below its historical average of 3.7 per cent in the medium term, and indicated that the global economic growth forecast would have been revised upwards had there been no war.
Global inflation forecasts have been raised to 4.4 per cent
The report noted that inflation forecasts have been revised upwards, stating that global headline inflation is expected to rise to 4.4 per cent this year before falling to 3.7 per cent in 2027. The report stated that in a negative scenario involving larger and more persistent increases in energy prices, global economic growth is expected to fall to 2.5 per cent in 2026 and inflation to reach 5.4 per cent.
Growth forecasts for major economies have been revised downwards
The growth forecast for the US economy has been revised down from 2.4 per cent to 2.3 per cent for this year, whilst the forecast for next year has been revised up from 2 per cent to 2.1 per cent. The report highlighted that the growth forecast for the Eurozone economy has been lowered from 1.3 per cent to 1.1 per cent for this year, and that the growth forecast for the region’s economy for next year has also been revised down from 1.4 per cent to 1.2 per cent.
The IMF report noted that, within the group of emerging markets and developing economies, the growth forecast for the Chinese economy was revised down from 4.5 per cent to 4.4 per cent for this year, whilst remaining at 4 per cent for next year.
Georgieva: Even our most optimistic scenario includes a downward revision
IMF Managing Director Kristalina Georgieva said, “In fact, had it not been for this shock, we would have been revising our global growth forecasts upwards. However, now even our most optimistic scenario includes a downward revision in growth.”
Georgieva noted that growth would be slower “even if the new peace were to be permanent”, highlighting that the energy supply shock was significant, global and asymmetric. She reported that the world’s daily oil flows had been cut by approximately 13 per cent and liquefied natural gas (LNG) flows by 20 per cent, that energy costs had risen, and that supply chains had been disrupted worldwide.
Explaining that supply disruptions have created a ripple effect and will continue to do so for some time, Georgieva stated that some oil refineries have closed due to the inability to maintain minimum flow levels, and that shortages in refined products, particularly diesel and jet fuel, have disrupted transport, trade and tourism activities.
The number of people facing hunger could rise above 360 million
Georgieva pointed out that transport problems were also threatening food security, stating that this situation could lead to at least 45 million more people facing food insecurity and could push the global number of people facing hunger above 360 million. IMF Managing Director Georgieva noted that high fertiliser prices could further exacerbate this situation, highlighting that dependence on critical inputs such as sulphur, helium and naphtha is causing supply chain disruptions in sectors including chip production, medical imaging and the plastics industry.
Now let’s turn to the Turkish economy. The war on our doorstep is battering the Turkish economy with fierce waves. In particular, while fuel price hikes are being passed on as price rises across the board—from airline tickets to food—the budget deficit and current account deficit are widening, and international organisations are revising their inflation forecasts upwards.
Fluctuations in fuel prices continue
Fluctuations in oil prices continue due to the uncertainty surrounding the US-Iran talks. A price increase of 3.33 lira per litre was applied to diesel on 15 April. As a result, the price of diesel rose to 75.61 lira in Istanbul, 76.73 lira in Ankara and 77.01 lira in Izmir. There has been no change in petrol prices. It is sold at 62.64 lira in Istanbul, 63.59 lira in Ankara and 63.88 lira in Izmir. On 17 April, a price reduction of 4.04 TL was applied to diesel. However, another price hike is expected mid-week.
Massive hike in flight ticket prices; new increase of up to 35% ‘inevitable’
In Turkey, the ceiling prices for domestic flights set by the General Directorate of Civil Aviation (SHGM) have been raised from 6,100 lira to 6,990 lira. Despite this official 15 per cent increase, industry representatives and experts emphasise that this hike is insufficient to cover costs, and that further increases of between 25 and 35 per cent in ticket prices are on the horizon.
Speaking to Bloomberg HT, aviation expert Güntay Şimşek noted that the cost pressure on airlines cannot be explained solely by geopolitical tensions. Şimşek stated that the rise in jet fuel prices from $800 to $1,600 per tonne has left the sector in a deadlock.
There is no supply issue for jet fuel in Turkey, but costs are high
Whilst there are difficulties regarding jet fuel production in Europe and China, it is noted that Turkey is not currently experiencing any supply issues. However, experts are warning that if supply problems in the Gulf region are not resolved, crises such as the inability to supply fuel for short-haul flights of under three hours on a global scale could arise. Although Turkey maintains its potential in aviation, high costs continue to limit the revenues of airlines.
Fitch changes outlook to stable, raises inflation forecast
The international credit rating agency Fitch Ratings has maintained Turkey’s credit rating at ‘BB-’ whilst changing the outlook from ‘positive’ to ‘stable’. It was stated that the revision in the outlook stems from the significant decline in Turkey’s foreign exchange reserves since the start of the war in Iran.
It was noted that the Central Bank has sold over $50 billion in foreign exchange to the market to support the Turkish lira, whilst it was also noted that should the war drag on, there could be further deterioration in external debt repayments and the inflation outlook.
Fitch raised its inflation forecast by 2 percentage points to 27% by the end of 2026. The agency forecasts that inflation will fall to 21 per cent by the end of 2027. On the growth front, Fitch forecasts that the Turkish economy will grow by 3.6 per cent in 2026 and gain momentum to 4.2 per cent in 2027.
$239 billion in external debt will be repaid in a year, which is high relative to reserves
Fitch forecasts that the current account deficit will widen in 2026 due to high energy prices and will expand further in 2027. It noted that if oil prices rise by a further $20 per barrel, the current account deficit would increase by more than one per cent of GDP and would further fuel inflation.
Emphasising that Turkey’s external financing needs remain high, it was noted that external debt maturing within the next 12 months stands at $239 billion, a figure that remains high relative to foreign exchange reserves.
Billions flowed into interest payments in the first quarter; 20 out of every 100 lira went towards interest
The budget recorded a deficit in the first month of the war in the Middle East. The Ministry of Treasury and Finance announced the budget figures for March. Central government budget expenditure stood at 1 trillion 460.4 billion TL, budget revenue at 1 trillion 230.5 billion TL; the budget deficit was 229.9 billion TL. In the January–March period, central government budget expenditure stood at 4 trillion 425.4 billion TL, budget revenue at 4 trillion 5.4 billion TL, whilst the three-month budget deficit amounted to 420 billion TL.
Interest expenditure continues to remain at high levels within the budget. Interest expenditure, which rose by 46.3 per cent compared to the same month of the previous year to reach 236 billion TL in March, accounted for 16 per cent of total budget expenditure. During this period, 180.2 billion TL of interest expenditure consisted of domestic debt interest payments, whilst 30.2 billion TL consisted of external debt interest payments.
The funds allocated to interest outstripped public expenditure on social and public services. According to a report in the Birgün newspaper, whilst 376.1 billion TL was allocated to health services, 605.3 billion TL to education services, and 773.5 billion TL to social security and social assistance in the first three months, interest expenditure reached 876.1 billion TL.
In the first three months, 20 out of every 100 lira spent from the central budget went towards interest. Of every 100 lira, 17.5 went to social security and social assistance, 14 to education, and 8.5 to healthcare.
Tax revenues rose but were insufficient to cover expenditure
In March, tax revenues—which accounted for 85.9 per cent of central government budget revenues—increased by 63.9 per cent year-on-year to reach 1.1 trillion TL. Income tax rose by 81 per cent year-on-year to 312.3 billion TL, whilst corporation tax increased by approximately 4.5 times to 22.3 billion TL. In March, excise duty revenues rose by 29 per cent year-on-year to 171.1 billion TL. Due to the impact of the sliding scale system introduced on 5 March, the increase in excise duty on petroleum and natural gas products was limited to 11.6 per cent year-on-year. Excise duty collected on petroleum and natural gas products, which stood at 49 billion TL in January and 44 billion TL in February, fell to 36 billion TL in March.
Current account deficit at its highest level in the last 10 months
According to balance of payments data released by the Central Bank, the current account recorded a deficit of 7 billion 501 million dollars in February 2026, whilst the current account excluding gold and energy recorded a deficit of 1 billion 462 million dollars. Consequently, the current account deficit reached its highest level since April 2025.
During this period, the balance of payments-defined trade deficit stood at 7 billion 478 million dollars. On an annual basis, the current account deficit in February was approximately 35.4 billion dollars, whilst the balance of payments-defined trade balance recorded a deficit of 73.2 billion dollars.
The Central Bank’s 2025 loss exceeded 1 trillion TL
The Central Bank’s 2025 balance sheet has been announced. The Bank recorded a period loss of over one trillion lira, primarily due to payments on exchange rate-protected deposits. The Bank’s total assets stood at 12 trillion 403 billion 663 million 86 thousand 819 lira. During this period, the Bank’s gold reserves stood at 4 trillion 817 billion 61 million 208 thousand 973 lira.
As of the end of last year, the Central Bank of the Republic of Turkey’s (TCMB) reserve fund stood at 334 million 168 thousand 579 lira. With these results, the Bank’s loss for the 2025 period amounted to 1 trillion 64 billion 875 million 321 thousand 767 lira.
Meals are getting smaller; families with two school-age children have been hit hardest
The Institute for Social Studies has published its Ideal Nutrition Index report. The report noted that the cost of a healthy and balanced diet rose by over 20 per cent in some households during the first three months of 2026. It was emphasised that the rise in food prices did not affect income groups equally, with the poorest segment being disproportionately affected, allocating 30.4 per cent of their income to food. In the highest income group, this figure stands at just 12.8 per cent.
The sharpest increase occurred in the group comprising a family of four with two school-age children. The cumulative cost increase over three months was calculated at 20.2 per cent. For extended families with infants and elderly members, the three-month cost increase stood at 18.1 per cent. In particular, households with adolescents saw their budgets completely shaken by the combined monthly increases of 10.4 per cent, 4.4 per cent and 4.3 per cent, respectively, during the January–March period.
One in three Istanbul residents cut back on grocery shopping, as hopes of finding work dwindled
According to the results of the March agenda survey conducted by the Istanbul Planning Agency (IPA), affiliated with the Istanbul Metropolitan Municipality (İBB); 31.9 per cent of Istanbul residents stated that they had reduced their grocery spending compared to the previous month. 55.6 per cent of participants stated they had reduced their eating and drinking out habits over the past month, whilst 48.4 per cent said they had spent more sparingly on clothing. When asked, “Have you been concerned about having enough food at home?”, 35.1 per cent of participants answered “yes”.
In the survey, students and participants who stated they were looking for work but had been unable to find any were asked, “Do you believe you will find a job in the near future?” 30.2 per cent of participants believed they would find a job soon, 25.6 per cent were undecided, and 44.2 per cent stated they did not believe they would find a job.
Highest increase in fruit and vegetables
TÜİK announced that the Agricultural Producer Price Index rose by 3.85 per cent compared to the previous month, 12.88 per cent compared to December of the previous year, 36.09 per cent compared to the same month of the previous year, and 39.25 per cent compared to the 12-month average in March 2026. Looking at the data, the sub-group with the highest annual change was berries and nuts at 56.36 per cent, whilst the sub-group with the highest monthly change was vegetables and fruit, with an increase of 20.37 per cent.
TMSF puts Tekfen’s massive factory up for sale
Following the appointment of a receiver to Tekfen Holding, which holds a significant place in Turkey’s industrial history, the sale of assets has commenced. TMSF announced that it has officially put the group’s largest factory up for sale.
The massive facility in question is known as one of Turkey’s most competent centres in the heavy steel manufacturing sector. Spanning a total area of 49,500 square metres, including 19,250 square metres of covered space, the factory stands out for its technical equipment and production capacity. The estimated (minimum) sale price set for the facility has been announced as 1.18 billion TL.
78-year-old footwear giant Yeşil Kundura has gone into liquidation
Turkey’s 78-year-old footwear company HK Kundura (formerly Yeşil Kundura) has gone into liquidation. The Istanbul Anatolia 2nd Civil Commercial Court announced HK Kundura’s liquidation on 9 April 2026. With the liquidation ruling, the duties of the receivers appointed to the company were terminated.
The foundations of Yeşil Kundura were laid in 1948 at the first shoe workshop opened by the Yeşil Brothers. The company operated in Istanbul for many years. The company, which had a shop beneath its building in Cevizlibağ, changed its name to HK Kundura in 2025. The bankruptcy of Yeşil GYO was also announced last month.
Turkish textile giant Settriko has gone into liquidation
Settriko Tekstil, a Turkish supplier producing for firms such as Boyner, DeFacto and LC Waikiki in the Turkish market, has ceased operations after failing to overcome financial difficulties that had been ongoing for some time. Founded in 2008, the company played a critical role in the supply chains of major brands both in the domestic market and on the international stage.
Operating from a 3,000-square-metre facility in Istanbul, Settriko had an average annual production volume of 1.7 million units. The brands for which the major firm produced goods included global groups such as Inditex, Dunnes Stores and Liberty, as well as niche brands such as Weirdfish, Seven Sisters, Voice and Missamerica.
Contraction in the automotive sector
Data for the first quarter of 2026 indicated a slight decline in production within the automotive sector. Turkey’s total automotive production fell by 7 per cent in the first three months of the year. Whilst there was a drop in export volumes, export revenue increased by 3 per cent due to the impact of higher value-added vehicles. The sharpest decline in production, at 37 per cent, was recorded in the tractor sector over the first three months, whilst the contraction in the domestic market reached 56 per cent.
We are by far the European leader with a 78 per cent rent increase
Turkey leads Europe by a wide margin with a 78 per cent rise in rents. According to a Euronews report analysing 2025 data, the annual rent increase in Turkey stood at 77.6 per cent, the highest rate by far. Montenegro, which ranks second in Europe on the same list, saw a rent increase of 18.5 per cent.
China’s first-quarter growth exceeded expectations
The Chinese economy grew above expectations in the first quarter of 2026, driven by strong export demand and a recovery in domestic consumption following years of sluggish performance. GDP rose by 5% year-on-year, reaching the upper limit of Beijing’s annual target.
This figure boosted optimism somewhat regarding oil demand in China, the world’s largest crude oil importer, though numerous other data points indicated that economic momentum had slowed towards the end of the first quarter.
Other key developments from last week include:
- According to TÜİK data, construction output fell by 1.3 per cent in February, whilst rising by 5.9 per cent year-on-year. Construction output thus recorded its largest monthly decline since April 2025. Year-on-year, it also saw its lowest growth rate since April 2025.
- Emlak Katılım Bankası became the new owner of PPR Holding and its subsidiary Papara Menkul Değerler, which were put up for sale by the TMSF. The estimated value for the tender had been set at 4.27 billion lira, or approximately 100 million dollars.
- Annual inflation in the Eurozone rose to 2.6 per cent in March. In Germany, annual inflation, which stood at 1.9 per cent in February, rose to 2.7 per cent in March due to rising energy costs.
- European Central Bank President Christine Lagarde stated that rising energy costs are pushing the Eurozone away from the ECB’s baseline scenario, but that this does not yet warrant a move towards interest rate hikes.
- German airline Lufthansa has decided to suspend operations at its regional subsidiary CityLine and reduce capacity at its main brand, Lufthansa, due to soaring fuel costs resulting from conflicts in the Middle East and chronic labour disputes.
- Honda announced a recall of 440,830 vehicles on the grounds that a software fault could cause side and curtain airbags to deploy without warning.
- Disney’s new CEO, Josh D’Amaro, announced that approximately 1,000 employees would be made redundant as part of a decision to streamline company operations, affecting several departments including marketing.
- According to Pentagon figures, the cost of the US war against Iran in the first six days was $11.3 billion; however, Linda Bilmes, a lecturer at the Harvard Kennedy School, predicts that the total cost could reach $1 trillion in the long term.
- The Wall Street Journal reported that the US Department of Defence (Pentagon) has approached major automotive manufacturers to bolster its dwindling ammunition stocks. Sources claim that the wars in Ukraine and Iran have depleted US ammunition stocks, prompting the Pentagon to consider involving automotive companies.