When Turkey shot down a Russian military jet last November, business ties between the two countries hit rocky terrain, with Russia slapping trade sanctions on Turkey.
|Instead of polarising, it’s time to unite people and look forward. That’s [Turkey’s] biggest challenge. I see more of a political challenge than an economic one.|
However, it seems all is now forgiven as presidents Recep Tayyip Erdogan and Vladimir Putin meet in St Petersburg to revive business relations – something both countries are keen to do as they both face unique sets of economic challenges and slowdowns.
Sanctions on Turkey’s tourism, construction and food export industries are now set to be gradually phased out, Russian package tours will no longer face suspension and two major joint energy projects will be unfrozen as part of the renewed relationship.
Where Turkey is concerned, a 41 percent drop in international arrivals – prior to the attempted coup – has proven detrimental to the tourism industry. Assurances were made to foreign investors post-attempted coup, legislation to create a sovereign wealth fund has been proposed and younger Turks are now being forced to pay into a private pension to improve on their savings, all in a bid to rescue Turkey’s troubled economy.
Many, like CEO of Limak Holdings Ebru Ozdemir, are positive about the future.
“Last year, Turkey broke its own record in foreign direct investments,” says Ozdemir. “We hit $16bn, and this year we want to break this again – we want to go even higher.”
But the general consensus is very much in favour of Turkish and Russian relations being back on track, especially where mutual benefits are concerned.
“Turkey needs Russian gas and Russia needs Turkish produce, beaches and warmer weather,” says Bulent Gultekin, professor of finance at Pennsylvania University. “There’s a perfect complementarity between the two countries.”
Also on this episode of Counting the Cost:
Egypt’s limping economy: The International Monetary Fund is granting Egypt a $12bn loan, to be spread out over a three-year period. Egypt’s economy has been suffering the effects of the political uprising in 2011 which overthrew former president Hosni Mubarak.
The removal of president Mohamed Morsi in 2013 plunged the country into further turmoil, leading to the growing currency crisis facing Egypt today. Tourism has seen a dramatic drop, and with it, foreign currency. But the issues don’t end there as inflation soars and foreign investment dwindles.
But with austerity measures such as a hike in taxes and cuts in energy subsidies set to hit the poorest in the country in the worst way, how will this IMF loan actually help, if at all? We speak to Ahmed Badawi, senior researcher and economist at the Free University of Berlin.
The new price of gold: Negative interest rates and the volatility of the world market has hiked the price of gold up 30 percent since last December alone, triggering a gold rush. China is currently the largest producer and consumer of gold – the investment material of choice in times of uncertainty.