An attempted coup in July 2016 and the subsequent political uncertainty resulted in currency fluctuations, a weakening of the tourism sector, rating downgrades by agencies and lower foreign capital investment.
Inflation eased from nearly 10 percent in January to 7.2 percent at year end, but the weaker currency threatens to drive inflation back up again.
In spite of the decreasing growth rate of the Turkish economy, the construction industry has been doing quite well, and the industry continued to grow over 2016 even as the economy contracted.
The government’s focus on improving housing and infrastructure will add growth, with several major projects, such as the Eurasia undersea tunnel and the Osman Gazi suspension bridge, completed in 2016, while the new Istanbul airport and Urban Renewal Project are still ongoing.
The complex geopolitical situation relating to Syria, Turkish-American and Turkish-Russian relations along with tense relations between EU and Turkey, as well as complicated internal political conditions, will continue to provide uncertainty in 2017.
Tourism is likely to remain subdued under such conditions, and foreign private investment will remain weak. Overall, the short-term outlook appears to be negative, despite supportive government policies.