'Turkish-Russian trade in construction and energy to grow faster than expected'

Published 23.08.2016 22:54

Turkey's normalization process with Russia created a stir in economy circles, however normalization will follow a different pace in each sector due to Russia's request to extend the normalization process. Also, the impact of the crisis on the people of the two countries, intervention of rivals and most importantly, Russia's economic state, are all factors leading to this different pace in sectors.

The construction, energy, tourism and export sectors in which the two countries have strong ties will return to their previous levels in different time frames in accordance with the size of the problem in each field. Murat Karakaş, the head of the Turkish desk at the Netherlands-based auditing and advisory services firm KPMG, said the developments do not mean the problems between the two countries will be solved immediately. Pointing out that Russian polls indicate more than half of Russians do not want the normalization process to be rushed, KPMG gave details about the anticipated developments in four main sectors.

According to the KPMG's report, the sanctions on the construction sector are expected to be lifted soon. Even though the sector came close losing its market value to rivals, Turkish construction companies' quality is said to be more sustainable than its rivals. While the losses during this period are likely to be repaired, what matters for Turkish companies now is to prove once again that they are irreplaceable for the Russian construction market, by taking a particular interest in their quality and timing.

KMPG suggests that energy has a key role in Turkish-Russian relations due to its political importance and monetary volume. The Turkish Stream and Akkuyu Nuclear Power Plant projects, which have a total cost of $35 billion, have been suspended since November, so these projects will resume right away and future agreements on them will be announced to the public soon, KMPG indicates. While the tourism sector is likely to improve after 2018, Russians are not expected to go back to Turkey any time soon due to their negative impression of the country. The former demand in the sector is in decline because of Russia's general economic state and the safety problems perceived in Turkey. While the report suggests these gaps will be closed in 2016 and the sector will see a serious increase in the number of tourists in 2017 compared to 2016, it is not likely for the sector to go back to its 2014 and 2015 levels by 2018 after the Russian economy resumes its growth trend.

Turkish Exporters Assembly (TİM) President Büyükekşi said the problematic process with Russia is finally over and the losses experienced between the two countries in foreign trade will be compensated from this day forward, especially in the fresh produce and textile sectors.

Turkish Contractors Association President Mithat Yenigün said the normalization process with Russia will not take long, but it will also not be easy for the sector to go back to its former glory.

According to Turkish Hoteliers Federation (TUROFED) President Osman Ayık, it is not yet possible to make a prediction about the number of Russian tourists due to the uncertain date of charter flights.

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