A suicide bomb in the heart of Europe’s largest city didn’t just target innocent tourists, it also hit a $32 billion industry already caught up in the conflict next door.

No one made a greater contribution to Turkey’s tourism receipts last year than Russians and Germans, who have helped make the country the world’s sixth most-popular holiday destination. Russians are staying away from Mediterranean resorts because of a political row over the war in Syria. Now Germans have been affected in the most-visited square in Istanbul, accounting for most of the 10 people left dead on Tuesday morning.

“The tourism sector will suffer even greater losses in 2016, particularly given that Germans constitute Turkey’s largest group of tourists,” said Naz Masraff, director for Europe at political risk consultants Eurasia Group. “The deteriorating security environment and its impact on tourism will weigh on economic sentiment.”

Turkey plans to increase the importance of tourism to help underpin a pickup in the economy following the collapse in emerging markets and a political quagmire that led to two elections in six months. Last year, though, was on course to be the first since 2006 when the number of tourists failed to rise.

Hagia Sofia

Russian President Vladimir Putin clashed with counterpart Recep Tayyip Erdogan over the downing in November of a fighter jet involved in the war in Syria. Since then, Russian tour operators were banned from selling vacations to Turkey and the countries suspended visa-free travel.

The industry was also harmed by waves of bomb attacks attributed to Islamic State militants, including one in Ankara in October that killed more than 100 people.

Previous attacks targeted Kurds at political rallies, suggesting spillover from the war in Syria, where Kurdish militants are the primary ground forces fighting Islamic State. The bomb in Istanbul’s historical center is the first time foreign tourists have been targeted.

There was no immediate claim of responsibility, though the Turkish government identified the assailant as a foreign member of Islamic State who arrived from Syria recently.

Imperial Capital

Istanbul, the former seat of the Byzantine and Ottoman empires, hosts more visitors each year than New York, according to the 2015 Mastercard Global Destination Cities Index. The device exploded just meters from the Blue Mosque opposite Hagia Sofia museum. A suicide bomb last January killed one officer at a nearby police station.

“It’s a well-calculated target aimed at undermining Turkey’s tourism industry,” said Oytun Orhan, an analyst at the Center for Middle Eastern Strategic Studies in Ankara.

Tourism directly accounts for 4.7 percent of the economy compared with 7 percent in neighboring Greece, according to the World Travel and Tourism Council. The government plans to boost receipts to $35.5 billion by the end of 2017 from $31.5 billion last year.

Disturbing Images

Television reports broadcast worldwide showed police had cordoned off the blast area as ambulance crews attended to victims, who included people from Russia, Norway, Peru and South Korea as well as Germany, according to media reports.

German Foreign Minister Frank-Walter Steinmeier said eight of his countrymen were killed and another nine severely injured. “For many years, terror hasn’t impacted us Germans as it has today,” he said. “We need to clarify who the assailant is swiftly, and clarify the circumstances.”

Visitors from the nation made up the largest share of vacationers in Turkey for all of the last three years, or 15 percent of them in the first 11 months of 2015. Russians were second, according to Turkey’s Ministry of Culture and Tourism.

For now, tourism-related stocks were unperturbed, with the index that tracks them rising 0.3 percent. Shares of Turkish Airlines closed down 0.3 percent in Istanbul.

“Every vulnerable emerging market has its idiosyncratic weaknesses,” Nicholas Spiro, managing director at Spiro Sovereign Strategy in London. “Turkey’s is the dramatic escalation in geopolitical risk which is plastered over TV screens and newspapers the world over and has a corrosive impact on sentiment.”

This article was written by Isobel Finkel, Selcan Hacaoglu and Tugce Ozsoy from Bloomberg and was legally licensed through the NewsCred publisher network.

Photo Credit: A policeman guards in front of the Blue Mosque at the historic Sultanahmet district after an explosion in Istanbul, Tuesday, Jan. 12, 2016. Lefteris Pitarakis / Associated Press