Turkish estimates suppose Turkey will bear the loss of between $2.3 and $8.3 billion in direct costs in 2016 alone

    

Less than four months after Russian sanctions in the wake of Erdogan’s ambush of Russian Su-24 in Syria things aren’t looking so great for the Turkish bottom line. Here is the Turkish daily Hürriyet with the roundup of the costs:

Turkish exports to Russia are down 40% since the heydays of 2013:

Russia’s share in Turkish exports was increasing until 2008; it decreased during the crisis but caught up again.

In 2013, it reached $7 billion, 4.6 percent of Turkey’s total exports. In 2014, it had fallen to 3.8 percent and $5.9 billion.

In 2015 it went down to 2.5 percent at $3.9 billion.

Overall during this period, Turkish exports to Russia dropped almost 40 percent.

Suitcase trading (Russian tourists stocking up on various items in Turkey) worth billions of dollars is expected to collapse:

With the embargo, a radical fall is expected in suitcase trading. In 2014, suitcase exports added up to $8.6 billion, but decreased 36 percent in 2015 to $5.5 billion.

The number of Russian tourists per annum which has already gone from 4.5 million to 3.6 million is certain to decrease far more:

The share of Russian tourists visiting Turkey constantly increased after 2009, reaching 4,482,000 in 2014, corresponding to 12.5 percent of incoming tourists.

In 2015, this figure plummeted in November and December, reducing the annual figure to 3,652,000, or a fall of 18.5 percent.

Very substantial Russian direct investment in Turkey is now under question:

Russia’s direct investment stock in Turkey was $6.9 billion in 2006, constituting 7.4 percent of all direct investments.

Even though they fell in the following years, they began climbing once more in 2012, reaching $9.2 billion or a 5 percent share in October 2015 with investments in the banking sector.

Russia had been a lucrative market for Turkish (mainly construction) contractors but they’re going to have a much harder time now:

In 2014, Turkish contractors undertook $27.1 billion in international contracts, $6.5 billion or which was in Turkmenistan. Russia followed at $3.9 billion, then came Algeria and Qatar.

Altogether Turkey in 2016 is set to add between $2.3 and $8.3 billion just in direct losses from lost trade and services, but with trickledown losses that are really incalculable.

In an Economic Policy Research Foundation of Turkey (TEPAV) study, it was calculated that Russia’s economic sanctions on Turkey will cost Turkey’s economy a (real) loss of $2.3 billion to $8.3 billion in 2016.

In this context, the Russians hock will pull down the economic growth of 2016 by 0.15 points to 0.90.

The sanctions are expected to have indirect effects also. While the direct effect in exports, tourism and the suitcase trade is expected to be $2.5 billion (real), the loss in incomes will be double, economists have said.

Moreover the costs are not evenly distributed, but will affect Turkey’s flagship tourism center Antalya the most:

Turkey’s tourism hub, Antalya, has been greatly impacted by the fall, with observers saying the negative effect will especially be felt in 2016. After Antalya, Istanbul is the next destination mostly affected by the crisis.

In addition to tourism facilities in Antalya which were designed for Russian tourists, the drop in fresh vegetables and fruits exports to Russia has harmed the province, as small- and medium-sized enterprises have begun experiencing tough times. Unemployment has begun, but the real impact will be seen in coming months.

Moreover, property sales have dropped in Antalya, which was prioritized by Russians in terms of property purchases. There is activity in the region, though, with property-owning Russians putting their properties up for sale.