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The Erdogan regime appears to be reeling after Sunday's local elections saw the Republican People's Party (CHP) win the vote in 36 of Turkey's 81 municipalities, which means it has reached 44.4% of the total voter choice, although according to the official Anadolu News agency, the opposition would have won the local elections with only 37.5% of the vote.
If we were to consider the percentage presented by Anadolu News, it is almost 10% lower than that registered by Kemal Kilicdaroglu - the political opposition candidate in last year's presidential election, who lost in the second round after receiving 47, 82% of the votes cast, against the 52.18% of Recep Tayyip Erdogan, supported by the Justice and Development Party (AKP), but higher than the one obtained by the CHP in the parliamentary elections where it met only 25%.
In the wake of last year's presidential election, Erdogan appeared to have consolidated his power, despite corruption scandals that followed the national tragedy of the February 2023 southern Anatolia earthquake, which left 50,000 dead in Turkey and Syria under the rubble of buildings that they fell after the earthquake. However, despite the almost total control and dominance over the mass media, it seems that a decisive role was played in the last 10 months by the inflation rate which remained at high levels - at the beginning of March 2024 it was at 67.07% and Mehmet Şimşek , the finance minister said, quoted by the local BloombergHT television station, that inflation would remain high in the coming months, then decrease until March 2025 - and which had severely eroded the purchasing power of the majority of the population.
Under these conditions, the political opposition managed to impose itself on Sunday in the major metropolitan centers: Istanbul, Ankara, Izmir, Adana, Antalya, Bursa and Mersin, which represent 60% of Turkey's population and approximately 62% of the Gross Domestic Product. The major cities that moved into opposition in the local elections were İzmir, Adana, Antalya and Mersin. Istanbul alone accounts for 16 million inhabitants and 30% of GDP, so the election gave the CHP a significant say in the nation's economic life.
Turkish markets reacted cautiously yesterday following the local election results. The main index on the Istanbul Stock Exchange fell 1.7 percent in slow trading. The lira continued to fall, taking its losses to more than 8% so far in 2024.
In Istanbul, incumbent mayor Ekrem Imamoglu (CHP) said he had defeated the AKP's government candidate by more than a million votes.
Imamoglu said after the results were announced: "Tonight (ed. - Sunday night), 16 million citizens of Istanbul sent a message to both our rivals and the president. Those who do not understand the message of the nation will ultimately lose."
In the capital Ankara, incumbent mayor Mansur Yavas (CHP) claimed victory over his rival, hailing the result as "a clear message to those running this country".
In a speech from the balcony of the presidential palace, Recep Tayyip Erdogan admitted that his party had "lost altitude" across the country and said it would go through a process of self-reflection and rectifying the mistakes it had made.
In Sunday's elections, almost 61 million Turks had the right to vote, who voted for their mayors, members of the provincial council, and other local officials.
• Opposition victory in major cities in local elections - a blow to Erdogan as he tries to consolidate his power
Regarding Sunday's election, Sinan Ulgen, director of the Edam think tank in Istanbul, told The Associated Press that the "surprising result" was due to voters wanting to punish the ruling party for the state of the economy and described the election as " a key point" for Imamoglu, stating that the current mayor of Istanbul would rightfully become the opposition candidate for the next presidential election.
The election results "could change the political game in Turkey," Hakan Akbas, senior adviser at Albright Stonebridge Group, told CNBC.
Hakan Akbas said: "The outcome of the local elections could breathe new life into Turkey's democracy and bring new perspectives on how to tackle economic problems, town planning and the development of public services. Success will depend on the opposition's ability to come together as a united front and present a vision for Turkey's future that resonates everywhere."
He noted that the outcome of the local elections is "crucial for the trajectory of Turkey's fiscal policies" and expects the next period to see necessary but unpopular reforms.
But while Erdogan's political opponents celebrate the result of the local elections, this is by no means the end of the road for the Turkish president, some political analysts note.
Wolfango Piccoli, co-president at consultancy Teneo Intelligence, quoted by CNBC, says: "Electoral upset from the local elections will make it difficult for Erdogan to push through the planned constitutional changes, but at the level of central politics it does not change anything. It would be naive and erroneous to assume that this failure marks the beginning of the end for Erdogan."
The political analyst argues that the Turkish president "will not move towards greater political accommodation, given his aversion to power-sharing, and will not tone down his polarizing rhetoric because of this stinging defeat."
Wolfango Piccoli stated: "Rather, it is likely to respond forcefully (but not necessarily immediately) to the challenges generated by the opposition's victory in the local elections. In this sense, it is unlikely that Erdogan will abandon his plans for a new constitution or for significant changes to the current constitution," changes that would strengthen and expand the power of the executive at the expense of the opposition.
• Gloomy forecasts of economists regarding the rate of inflation
The political situation will also have to take into account the economic condition of Turkey, given that the current monetary policy interest rate stands at 45% per annum, and economic analysts estimate that there will be a tightening of the current financial regime, given price pressure and strong domestic demand.
Liam Peach, senior emerging markets economist at Capital Economics, was quoted by Reuters as saying: "Underlying price pressures remain elevated and, if this continues, the possibility of a resumption of the central bank tightening cycle will increase in the coming months next".
Monthly consumer price inflation (CPI) was 4.53 percent, according to Turkey's Statistics Institute, down from 6.70 percent in January, but well above the 3.7 percent forecast by a Reuters poll. According to the cited source, restaurants and hotels led the price increase in February with 94.5%, followed by a 91.8% increase in education prices. Prices of food and non-alcoholic beverages increased by 71.1%.
According to the estimates of the authorities in Ankara, inflation would decrease this year by more than 20 percentage points and reach a rate of 42.7% on December 31, 2024.
During that time, the pound has fallen 8% since the start of 2024, after a nearly 37% drop in 2023, further boosting import prices. Although some economic analysts predict a further fall in the Turkish currency after Sunday's election, Finance Minister Mehmet Şimşek said the authorities do not want the lira to depreciate.
Tomorrow, April 3, the National Institute of Statistics of Turkey (TurkStat) will release data on the inflation rate for March in Turkey, and economic analysts expect to see a further rise in prices. According to the Daily Sabah, consumer price inflation in Turkey is expected to have reached nearly 70 percent in March, driven mainly by food and services prices, according to surveys, keeping pressure on tight monetary policy. The median estimate of 11 economists for March inflation was 69.1 percent, with forecasts ranging from 68.2 percent to 70.54 percent, according to a Reuters poll. The monthly forecast for price growth ranged from 3% to 4.42%.
According to data released yesterday by the Istanbul Chamber of Commerce (ITO), retail prices in Istanbul increased by 3.93% in March compared to February, spending on health and personal care increased by 3.05%, food prices increased by 3.62%, while spending on household goods and housing increased by 6.01% and 3.90%, respectively.
The data also show a 1.06% increase in transport and communications spending and an 8.96% increase in clothing spending.
The Central Bank of Turkey, which already raised interest rates by 3,650 basis points in June 2023, decided to raise the benchmark rate by another 500 basis points on March 21, 2024 due to the deterioration of the inflation outlook.
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