Turkish lira likely to see positive developments as Russia considers lifting sanctions against Turkey

The Turkish lira is likely to witness positive developments as Russian President Vladimir Putin is planning to lift sanctions against Turkey in a few days. He assured that the Russian government will lift the ban on tourism to Turkey following his meeting with Turkey’s President Recep Tayyip Erdogan on Wednesday.

According to media reports from Turkey and Russia, the Russian President is contemplating lifting sanctions on food imports and on the restrictions on construction firms as well, said Commerzbank in a research report.

The Kremlin considers Erdogan's apology over the jet incident enough to bring the diplomatic crisis to an end. However, it is not clear if the ban will be lifted soon or it's mere an announcement.

President of both the countries are set to meet in September; however, the foreign ministers will meet on Friday. After the sanctions are lifted, rise in Turkey’s agricultural exports would benefit the first. This will aid the trade balance of the country markedly and also help push up food prices slightly in Turkey, whereas push prices down in Russia.

Meanwhile, Turkey’s tourism sector is expected to take a longer time in making a significant recovery as other counter forces are at play, particularly in terms of the country’s security situation, according to Commerzbank.

Russia had put a ban on charter flights that impacted Turkey’s tourism sector gravely. There was a record drop in the number of tourists arriving in Turkey in May.

A 92 percent of decline in Russian visitors was recorded, while the total number of arrivals fell 35 percent to 2.49 million in May as compared to a year ago. Tourism contributes about 6.2 percent to the overall economic output and accounts for 8 percent of employment in Turkey.