ISTANBUL, Turkey - The maze of shops comprising the exotic Grand Bazaar in central Istanbul has carpets, jewellery, souvenirs - everything, it seems, but customers.

Shopkeepers say the wave of terrorist attacks that stunned Turkey's most important commercial city and killed 57 people has frightened buyers away.

"Business has changed. It has almost died," Mehmet Uzungun, 32, a salesman at a bazaar gift shop said Monday. "After the first attacks, it was kind of OK. But after the second attacks, there's nothing."

Still, economists say it is too early to tell whether the attacks will inflict long-term damage on Turkey's tourism industry or derail its economic upswing.

"We don't have enough data," said Serhan Cevik of Morgan Stanley in London. "This is an irrational act that will have some consequences. It's a big economy, so it will recover. But if this goes on, it could become an issue."

The splendor of Istanbul draws millions of curious visitors each year. But suicide attacks against two Istanbul synagogues on November 15 and then again five days later against the British Consulate and local headquarters of a London-based bank have severely shaken the city.

Tourists are still here, but whether that will change when the crucial high season gets underway in the summer of 2004 is one of the key questions hanging over this nation as it recovers from the carnage.

Foreign governments - including the United States, Britain, Australia and Germany - have issued an outpouring of warnings that their citizens should avoid non-essential travel to Turkey.

Defying terror

But the Turkish Hotel Association said that advising people to stay away plays into the hands of terrorists trying to sow chaos.

"What we request from our neighbours, friends around the world and allied countries is to encourage travel to Turkey more than before," the association said in a statement. "Travel so that the terrorists will see that the world is together."

Those who had already made the trip agreed that it was important not to be driven away by terrorists.

"If I leave, they win," said Stefanie Durbin, 36, of Seattle, Washington, as she picked through handcrafted jewellery at an open market not far from the Blue Mosque, a 17th century Ottoman mosque famous for its unique six minarets. "By staying here, I'm not letting them win."

Others seemed to agree. Armed with guide books and an appreciation of the nation's history and heritage, many travellers from abroad said they had no plans to cut their vacations short, despite pleas from family to come home.

"It was important for me to come here after the synagogue bombing," said Jonathan Lenn, 24, of Sydney, Australia, who was among a smattering of tourists wandering through Istanbul's historic Sultanahmet quarter. "I'm Jewish, and I wanted to be with the Jewish people here."

Stefanie Rother, spokeswoman for TUI AG, Europe's largest tourism company, based in Hanover, Germany, said its business in Turkey probably would not be affected because most clients spend holidays along the Mediterranean coast, about 1,000 kilometres (620 miles) from Istanbul.

"We have had no cancellations so far," Rother said.

But French tour operator FRAM said it was bracing for a large number of cancellations among its 160 tourist bookings to Istanbul through February.

Pacha Tours, another operator that specializes in Turkish tours, said that it also received concerned calls from travel agencies.

"We only received one call after the first attacks, but since the attacks on Thursday, 100 people have canceled or delayed their trip," said Didier Huet, Pacha commercial director.

About 13.5 million tourists visited Turkey last year - led by 3.3 million Germans, 2.3 million Russians and about 1 million Britons, according to the Tourism Ministry. Turkey counts on tourism, its second-largest source of foreign currency earnings, to add US$10 billion a year to its economy.

But the tourism industry has suffered for several years. The arrest of Kurdish guerrilla leader Abdullah Ocalan in 1999 sparked protests and initiated a downturn in tourism. Then came two massive earthquakes, the September 11 attacks on the United States and the war in Iraq. Recession hit Turkey in 2001.

The industry was mounting a comeback this past year, with the number of visitors up nearly 20 per cent from the same period last year. But then Istanbul was stricken with terror, and hopes that foreign tourists would grow in number was thrown in doubt.

"It clearly is going to weigh on people's minds when they are booking for holidays next year," said Tolga Ediz, an economist with Lehman Brothers in London.

(Agencies via Xinhua)