Turkey’s economy would likely experience an immediate boost, especially from foreign investment, should the opposition nominee Kemal Kilicdaroglu defeat Turkish President Recep Tayyip Erdogan in the upcoming election, economists told The Media Line, two months before citizens are expected to go to the polls.
Concerns over the economy have been a key factor in dragging down Erdogan’s popularity, although his approval rating has been on a steady rise and was less impacted by his government’s handling of the devastating February earthquake than some had expected.
Bloomberg reported that eurobonds rallied and there was a fall in credit default swaps after the opposition coalition reached an agreement Monday to make Kilicdaroglu the nominee, following a chaotic weekend in which the second largest party temporarily left the bloc. Kilicdaroglu, a 74-year-old former civil servant and economist, heads the largest party in the bloc, the Republican People’s Party (CHP).
Timothy Ash, an economist focused on Turkey and a strategist at BlueBay Asset Management, said the reaction showed “people are more confident about the future.”
He said that in the short term, there will be an expectation of a return to orthodox economic policy and improved central bank governance.
“The market will rally; the lira will rally,” he said.
Economists say that investor confidence in the country’s finances have been shaken by unorthodox economic policies.
Turkey has experienced staggering inflation over the last two years, blamed on policies the government insisted on, which have led to skyrocketing prices for food and other essentials.