Flag of Turkey. (Photo credit: Wikipedia)

Leading Turkish newspaper Hurriyet reports that tensions with Russia could cost Turkey’s economy nine billion dollars in the worst case scenario of “zero relations”, citing Turkish Deputy Prime Minister Mehmet Şimşek speaking Dec. 7.

Source: Turkish economy risks losing $9 billion over Russia crisis: Deputy PM – ECONOMICS

The Turkish government is seriously underestimating the downside risk to the Turkish economy. The Turkish economy is dependent upon US multinationals investing in Turkey which provides jobs for young people in Turkey – without jobs the young people are likely to be on the streets looking for political change. Multinationals will apply heightened political risk factors to investment decisions and at the margin this is likely to lead to a decline in investment. From here things could quickly escalate in terms of international consumers rejecting Turkish goods in protest at the policies of Turkey’s government.

I sense that President Putin‘s sharp brain has appreciated the implications. Meanwhile, I wonder when the penny will drop for Erdogan‘s government that they have scored an own-goal in downing the Russian fighter?

For more information on America’s trade and direct investment in Turkey, open this link. 

Thoughts?