A lack of confidence is the latest problem topping the mounting heap of Turkey's economic woes. The first indication comes from the decreasing appetite for investment, a cause of concern for government ministers and bureaucrats who are increasingly drawing attention to the problem.

The confidence gap stems from both external factors and domestic issues, including political uncertainty and rekindled clashes between government forces and the Kurdistan Workers Party (PKK). The protracted electoral atmosphere — first for the June 7 polls and now ahead of the Nov. 1 snap elections — has deferred economic reforms, leaving financial markets in uncertainty with investors unable to see ahead. The Kurdish-majority eastern and southeastern provinces have further lost their appeal to investors amid bloody unrest marked by intensified PKK attacks.

Speaking at the Istanbul Finance Summit on Sept. 8, Central Bank Gov. Erdem Basci stressed a “need to boost confidence,” adding that a number of structural reforms to that effect would be announced in November during the G-20 summit in Turkey’s Mediterranean city of Antalya.

“Investment is a function of two things: The first is interest rates and the second is simply confidence. On the issue of confidence, the required improvements have been lagging since 2009,” Basci said.