Losing Ground: 2015 Proved a 'Lost Year' for Turkey

In an interview with CNBS, Unicredit Bank AG's Chief Economist for Central and Eastern Europe Lubomir Mitov said that Ankara could derive enormous benefit from the situation in Europe and capitalize on low oil prices, but instead it had lost all its economic advantages, quarreled with all its neighbors, and spoiled ties with Russia.

According to Mitov, 2015 was a "lost year" for Turkey, which missed many opportunities because of the deterioration of the geopolitical situation.

He said that in particular, Turkey could have "benefited tremendously" from the current situation in Europe, where the Central Bank has  increased asset purchases to try to keep the economy afloat. Still, those gains were never achieved due to internal political strife and geopolitics, Mitov recalled.

"Turkey is underperforming [and] has been underperforming for the full year…it's even underperforming after the elections," he said.

He also pointed out that "Turkey is probably 3 to 4 percent weaker than it should have been after the elections, but for these geopolitical problems."

Even though the previous government tried to develop friendly relations with its neighboring states, Turkey now has "almost no neighbors left, according to Mitov, who recalled that Ankara earlier sparked rows with Iraq, Egypt and Syria.

The situation is further exacerbated by Turkey's increased tensions in relations with Russia after Ankara's downing of the Russian Su-24 bomber. In response, "Moscow clamped down on agricultural imports, set stringent visa limits, and restricted tourism to Turkey," according to Mitov.

He was echoed by Peter Toogood, an investment director at City Financial Investment Company Limited, who was quoted by CNBS as saying that a lack of structural reforms has stopped Turkey from capitalizing on "the full benefits of economic boons like low oil prices."

"The lira continues to decline, it has had no meaningful impact … the oil price has come down, [and] it should be the absolute example of a beneficiary, and it hasn't been," Toogood said.