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Türkiye Elections: Political Leaders May Change, But Macroeconomic Challenges Will Remain The Same

The outlook for Türkiye's presidential and parliamentary elections, which are scheduled on May 14, 2023, is highly uncertain. For the first time since Tayyip Erdogan was elected Prime Minister two decades ago, Türkiye's typically fragmented opposition has united against the ruling AKP Party. Türkiye's weak macroeconomic backdrop - reflected in high inflation and a depreciating lira - have also weakened Erdogan's popularity. Polls predict high voter turnout and a close race between Erdogan and Kemal Kilicdaroglu, the presidential nominee for the six-party National Alliance Bloc. The winning candidate needs to win over 50 percent of the votes to be elected. Current polls suggest the two main contenders are likely to fall short of this threshold, in which case there will be a runoff on May 28.

Key Highlights

-- Upcoming elections are important for Türkiye's economic and political future

-- Election polls indicate a close race: if the opposition wins, this could lead to a reversal in key economic policies

-- Regardless of the election result, given high inflation and current account deficits, Türkiye will need a substantive macro-economic adjustment in the coming months

“The tighter policies needed to facilitate the macroeconomic rebalancing, coupled with a challenging global backdrop, could result in sharply lower growth,” says Rohini Malkani, Senior Vice President, Global Sovereign Ratings. “Whatever the political outcome of the upcoming elections, Türkiye's macroeconomic challenges will remain severe.”