Russia tensions could cost Turkey $13 billion: Deputy PM Simsek

Turkish cargo train carriages sit on a transport ship after they were sent back at the Russian border.
Turkish cargo train carriages sit on a transport ship after they were sent back at the Russian border.PHOTO: EPA

ISTANBUL (Reuters) - A worst-case scenario of "zero relations" with Russia would cost Turkey about US$9 billion (S$12.6 billion), and the current tension will likely shave 0.4 per cent off annual output, Deputy Prime Minister Mehmet Simsek said on Monday.

Simsek, Turkey's newly appointed economy czar, also told broadcaster NTV that the government may take "remedial steps" on plans to increase the minimum wage, although it would not be prepared to shoulder the entire cost of the hike.

Moscow has approved a raft of sanctions in retaliation for Turkey's downing of one of its warplanes over Syria late last month, banning imports of everything from tomatoes and apricots to chicken products and salt.

The import ban on Turkish fresh fruit and vegetables is likely to leave Turkey with a supply glut that could push down prices and, economists say, shave half a percentage point off the inflation rate.

Turkey's agricultural exports to Russia amount to US$1.27 billion annually, with food accounting for US$764 million of that. Companies are looking for alternative markets but representatives in the sector don't expect to find any soon.

Already there are reports of falling tomato prices at wholesalers.

At a Friday market in the working-class neighbourhood of Gultepe in Istanbul, some sellers said they were starting to see an impact even though Russia's food sanctions don't take effect until Jan 1.

"Prices have decreased a little bit," said 42-year-old Hasan as he sliced off pieces of tomato to offer to passers-by. "It will be good because we have so many poor people and they need cheaper prices."

Most of the sellers in the market were selling tomatoes for around 4 lira (S$1.94) a kilogramme.