The European Commission has expressed "serious concerns" about pressures on media freedom and other civil rights in Turkey, in a report on Tuesday assessing the country's candidacy to join the 28-country European Union.
The report said that Turkey had suffered a "severe deterioration" in its security situation, as its authorities launched an extensive anti-terror campaign against the Kurdistan Workers' Party, both in the country and in neighboring Iraq.
"The report emphasizes an overall negative trend in the respect for the rule of law and fundamental rights. Significant shortcomings affected the judiciary as well as freedom of expression and freedom of assembly. Turkey saw a severe deterioration of its security situation. The settlement process of the Kurdish issue came to a halt despite earlier positive developments on the issue," said the report.
It added that the new government formed after the repeat election in November would need to address these "urgent priorities."
The election saw President Recep Erdogan's Justice and Development Party score a surprise re-election.
The status quo result will bring some certainty back to markets, despite the European Commission's concerns about Turkey's reform agenda under Erdogan.
"I think if you look the last election results after November 1, we see a great relaxation of the market in terms of political stability coming in and there is a big expectation that the revival of the domestic economy will actually take place. I think those two things give us more confidence in our business in Turkey," Kaan Terzioglu, CEO of Turkcell, a leading mobile phone operator in the country, told CNBC on Tuesday.
Accession negotiations between Turkey and the European Union began in 2005.
— By CNBC's Katy Barnato. Follow her on Twitter @KatyBarnato.