Prospects for Turkey in the third quarter

Subject

Prospects for Turkey in the third quarter.

Significance

The third quarter will be a time of political uncertainty, if not instability. The first electoral defeat for the Justice and Development Party (AKP) has shifted the balance of power. AKP is 18 seats short of a majority and rifts between all four parliamentary parties make coalition-forming difficult. Three issues will probably dominate: the various configurations for a coalition or minority government; the Kurdish issue; and the prospect of early elections. Political uncertainty will add to obstacles slowing economic recovery, already hampered by global and regional economic conditions.