Turkey topped the list of democratic countries, ranking 41th and last in the Democracy Index for the OECD and EU member states.
Such reports affect investment opportunities in Turkey, whose economy already suffers from several factors, notably the intervention of President Recep Tayyip Erdogan in economic affairs, the absence of legal security, as well as his row with the United States and a record decline in the value of the Turkish lira.
According to the report, "the democratic and constitutional system in Turkey has deteriorated significantly, over the past few years, as a result of government intervention under Erdogan."
However, the report released on Tuesday said that citizens' confidence in non-liberal governments in Hungary, Poland and Turkey is increasing despite the declining standards of democracy in these countries.
The German Bertelsmann-Stiftung Foundation, which prepared this report, attributed the growing public confidence in the liberal governments of Hungary, Poland and Turkey to the fact that "fundamental democratic values are not sufficiently entrenched in the political consciousness of a large part of society."
Sweden, Finland, Norway, Denmark and Germany topped the list of the Democracy Index, while Poland, Romania, Mexico, Hungary and Turkey came in the lowest ranks.
Last month, the Turkish president appointed himself chairman of the country's sovereign wealth fund and completely changed the board of directors of the wealth fund. Finance Minister Berat Albirek, his son-in-law, appointed his deputy.
The measure was the latest in a series of steps taken by Erdogan to seize new powers since he won the June presidential election, and the country has since turned into a powerful executive presidential system.
The pound has lost about 40 percent of its value since the beginning of the year, hitting a record low of 7.2 lira to the dollar in mid-August.
The falling lira has pushed up food and fuel costs and pushed inflation up to 18 percent, its highest level in 15 years.
