Turkey’s economic performance has been poor, with high inflation and unemployment rates and small GDP growth. The EPI score projected to be 84%, or a C level, in 2016.

After four elections in the past two years, the political situation has finally stabilized. GDP growth is projected to be close to 3% in 2016, driven by improved domestic demand and decreased imports. Turkey is benefitting from lower oil prices but is exposed to overall emerging market turmoil. With persistent current account deficits of more than 5% of GDP, Turkey remains vulnerable to capital outflows and external sentiment shocks.

 Increase in wages and weaker lira have contributed to increased inflation, despite lower oil prices. Inflation is likely to be close to 7% in 2016 and would decelerate if the lira stabilizes. The victory of the ruling party in last year’s elections came at a toll of higher budget deficit for the current government. Promises to increase wages are likely to increase budget deficit above the current projection of 0.8% in 2016. The unemployment rate has been in the double digits and is likely to increase above 11% in 2016 from 10.8% in 2015.

The 5-Minute Economist projects Turkey’s EPI score to stay at C level in the next few years.