Turkey’s Erdogan faces toughest test yet in landmark election — with high stakes for the worldKilicdaroglu and his opposition coalition propose a very different economic path forward if they win. “Importantly for investors, the opposition wants to return to an orthodox monetary system vs. the incumbent administration’s heterodox policymaking,” Goldman Sachs analysts wrote in a research note Thursday.
Still, in either case “one should not expect miracles overnight as efforts to tame inflation with higher rates would likely cause currency shocks in the near-term,” warned Hakan Akbas, managing director of consulting firm Strategic Advisory Services, based between Istanbul and Washington. “However,” he added, “a new political leadership with a credible, competent economy team will have more support and patience from investors.”
Despite Turkey being a longtime member of NATO, a trademark of Erdogan’s has been to spar with his Western counterparts, criticize them at home and strengthen ties with Russia. His frequent anti-Western rhetoric and ongoing pushback against Sweden’s bid to join NATO have amplified tensions with European and American leaders — something Kilicdaroglu pledges to reverse.
“Turkey is a member of the Western alliance and NATO and Putin also knows this well,” Kilicdaroglu told the Wall Street Journal in an interview this week. “Turkey must comply with decisions taken by NATO.”
Kilicdaroglu also “wants to prioritize close economic relations with Europe in particular, while the incumbent administration’s current non-aligned policy stance would likely continue,” Goldman Sachs analysts wrote in their note.
