Turkey Country profile

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Country risk in Turkey is moderate with an OECD country credit grade of 4. This is akin to a speculative grade sovereign rating, which indicates a moderate likelihood that Turkey will be unable and/or unwilling to meet its external debt obligations. A large dependency on external finance and the ongoing power struggles with the Islamist Justice and Development Party (AKP) are cause for concern.

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Turkey is ranked 60 out of a possible 190 countries on the World Bank’s ease of doing business scorecard. It lags most of emerging Europe across numerous categories, including resolving insolvency, trading across borders, and obtaining credit. Corporate and financial information is sometimes not available or sufficiently reliable, which can deter private investors.

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The risk of expropriation in Turkey has increased significantly since 2014. From 2016-2017 the Turkish government expropriated over 1000 companies, mainly due to alleged links with Fethullah Gulen, a religious leader the Turkish government accuses of infiltrating the state with his followers and masterminding various coups.

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Turkey scores in the top half on most of the World Bank’s governance gauges, but performs poorly on ‘voice and accountability’ and ‘absence of violence’. Its low ranking probably reflects power struggles and constitutional crises that have occurred since the Islamist Justice and Development Party (AKP) came to power in 2002 under the leadership of current president, Tayyip Erdogan. These power struggles and crises have their origins in the AKP’s attempts to use its popular support to weaken the country’s traditional secular elite: the armed forces, judiciary and media. Mass arrests following the attempted coup and the ongoing state of emergency has increased political risk in Turkey.

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