The Turkish economy was long expected to enter a difficult period, like all developing economies, due to global factors. The troubles, however, are growing as Prime Minister Recep Tayyip Erdogan keeps hardening his attitude against the private sector over the Gezi Park protests.

Deputy Prime Minister Ali Babacan, who oversees the economy, has a proven record of sound economic management, illustrated by the hitherto positive results. But now he is up for a far harder task.

Erdogan had already demoralized the business community and complicated economic management when he blamed the Gezi Park protests on an “interest rate lobby” and accused certain companies, business people and foreigners. And now tax inspectors, escorted by police, have launched an inspection targeting Turkey’s largest business group Koc. The move is seen as a “punishment” for the refuge that Koc’s Divan Hotel offered to protesters fleeing the heavy-handed police, which Erdogan had publicly condemned.

The incident sparked heavy criticism both in the public opinion and the business community, raising concern over market economy processes and fears of further political escalation.