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Russian sanctions to cut Turkey’s GDP growth by 0.3-0.7 p.p. in 2016 — EBRD

December 07, 2015, 13:51 UTC+3 MOSCOW
According to the bank, "a further escalation of the sanctions cannot be ruled out, in which case Turkey’s country risk premium and cost of funding could rise
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© AP Photo/Hussein Malla

MOSCOW, December 7. /TASS/. The Russian sanctions against Turkey may reduce the country’s GDP growth in 2016 by around 0.3-0.7 percentage points "if they persist over the next year and are fully applied" while their impact on the Russia’s economy is likely to be limited, according to economists at the European Bank for Reconstruction and Development.

"Deteriorating economic ties are likely to have a non-negligible, but not major, impact on Turkey’s GDP. If the sanctions imposed so far persist and are fully applied through 2016, they may have a negative impact of around 0.3-0.7 percentage points on Turkey’s GDP in 2016, mainly through lower tourism revenues and food exports, and reduced new business for Turkish contractors in Russia. The bulk of the impact related to seasonal tourism revenues may come around the mid-year," the report said.

"The impact on Russia’s GDP will be limited, with some moderate pressure on import prices and inflation," EBRD said.

According to the bank, "a further escalation of the sanctions cannot be ruled out, in which case Turkey’s country risk premium and cost of funding could rise, causing a larger than estimated impact."

A disruption to energy supply is highly unlikely at the current stage, EBRD experts said. "The cost of the sanctions to the economy will be at the lower end of the estimate provided currently operating contractors and workers continue to be exempt from sanctions, and provided the affected exporters and contractors quickly find alternative markets for their goods and services," the report said.

The relations between Moscow and Ankara worsened after Turkish Air Force shot down a Russian Su-24M bomber in the area of the border between Syria and Turkey on November 24. However, Russia’s Defence Ministry said the Su-24M plane stayed exclusively over the Syrian territory and "there was no violation of the Turkish air space." Russian President Vladimir Putin warned that the attack on the bomber would have "serious consequences" for the Russian-Turkish relations.

On November 28, President signed a decree that suspends employment of Turkish workers starting from January 1, 2016. Also, Russia suspends the visa-free travel agreement with Turkey, imposes bans or restrictions on imports of certain goods. Besides, travel agencies are advised against selling holiday packages to Turkey. The government is instructed to tighten control over activities of Turkish haulage companies and to ban chartered flights between Russia and Turkey with the goal of ensuring security within Russia.

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