Economic sanctions imposed by the Kremlin after Ankara shot down a Russian warplane last year have begun to take their toll on Turkey’s economy, with the country’s set to lost upwards of $8.3 billion in 2016

After Turkey shot down a Russian war plane along the Syrian border on Nov. 24, 2015, the Russian administration decided on a series of economic sanctions against Turkey. Just three months on, this package is already starting to bite Turkey.

In a decree issued by the Kremlin toward the end of November 2015, certain goods from Turkey were restricted and all touristic trips to Turkey were suspended.

Mega energy projects in the energy sector were also mentioned among the economic sanctions but no official decisions have yet been made.

Exports

The first wave of economic sanctions was expected to affect Turkey’s exports to Russia and the tourism revenue from Russian tourists – expectations that were born out by reality. The losses from these sectors have started affecting Turkey’s economy. Tourism in Antalya and certain Aegean provinces, as well as agricultural produce earmarked for export have all been negatively affected by the embargo.

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.

In 2014, at $25.2 billion, imports from Russia corresponded to 10.6 percent of total imports. In 2015, the share went down to 10 percent with $20.4 billion. In this, the fall in world energy prices played an important role.

Drop in suitcase trading

Suitcase trading is a type of trade that emerged to allow citizens to bring goods from other countries as hand baggage. The citizens of such countries can purchase goods at their destinations, for up to $2,000 for instance, and carry them in their suitcases or send them by cargo to their own countries.

This practice has been identified with Russian tourists in Istanbul’s Laleli district for a long time. At the beginning, the Russian government facilitated the practice but later it became difficult; the decision-making belongs entirely to the Russian government. Other alternatives such as Iran and Libya also emerged, but Russia has always maintained its importance.

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.