Sanctions will cost Turkey and Russia billions, IHS economists warn
The Russian and Turkish economies will both suffer heavy losses after Moscow imposed economic sanctions in response to the downing of a fighter jet, a new economic report has warned.
Turkey was a major beneficiary of sanctions imposed on Russia by the EU last year in response to its involvement in the annexation of Crimea in Ukraine.
“Turkey will effectively lose the commercial and investment opportunities in Russia that emerged after west-Russia standoff over Ukraine and ensuing reciprocal sanctions. Turkish producers and exporters of fresh fruits and vegetables benefited most, seeing a significant rise in exports to Russia since 2014,” said economist Lilit Gevorgyan from IHS.
Gevorgyan said the loss of trade would feed through to inflation.
“Turkish producers and Russian consumers will feel the pinch. Restrictions on imported produce from Turkey will send an unwanted supply side inflationary impulse to Russia’s already staggeringly high inflation, which stood at 15.6 per cent in October,” she said.
Tourism is another area that will be a blow to Turkey.
Europe became too expensive for many Russians following the collapse of the rouble’s value last year. Many opted for Turkey instead, where the number of Russia tourists and other visitors soared to around four million last year, generating $10bn (£6.6bn) in revenues.
In 2014, Russia exported $24.5bn of goods, mainly natural gas, oil, steel and grain to Turkey, according to the Russian state statistics office, while imports from Turkey totalled at $6.7bn.
Gevorgyan added: “Bilateral trade has been on downward trend recently. But this was reflective of economic troubles both countries face, especially Russia that had been battling with recession. Now both countries will feel the pinch, as they stand to lose much-needed export-generated revenues, and will see negative spillover on their overall economies.”