The Impact of Ukraine Crisis's on Turkey and Ukraine’s Economic Relationship

Abstract

After the breakup of the Soviet Union and independence declaration of Ukraine in 1991, as in the other Soviet countries, Ukraine has left a heavy industrial based economy with an insufficient technology. Trade relations with Turkey gained momentum in 2004 and has continued its growing until today. This trade relationship has a complementary role and mostly based on intermediate good export. Turkey is the second largest export volume partner of Ukraine and providing the largest trade surplus for Ukraine. Ukraine economy is very sensitive to foreign trade fluctuations, therefore in the 2009 global crisis, Turkey’s trade volume with Ukraine declined more than two times. In 2014, military conflict in the East, Russian trade restrictions, the Hryvnia depreciation and tight fiscal austerity measures have exacerbated the existing macroeconomic challenges of Ukraine and pushed the country into its deepest recession since 2009. This study analyses the Ukraine crisis effects on its economic situation and effects on the Turkey and Ukraine’s economic relationship by using statistical methods. Data sources are: National Bank of Ukraine, State Statistics Service of Ukraine, Ministry of Finance of Ukraine, Trade Statistics for International Business Development, National Bank of Turkey, Turkish Exporters Assembly, Turkish Statistical Institute. Turkey, as a country has earned trusts of both Ukraine and Russia, is able to lead a peacekeeping force in Ukraine. Furthermore, Turkey should evaluate the possibilities to provide a credit line to Ukraine and it would be useful for Turkey to search the other markets and trade conditions as well.