Important Takeaways:

• Erdogan Suffers Historic Loss in Turkey Municipal Elections
• Turkey’s Recep Tayyip Erdogan suffered an unprecedented defeat at the ballot box against the main opposition party amid rampant inflation and the highest borrowing costs since the president swept to power more than two decades ago.
• Turkey’s lira weakened in early trading on Monday after Erdogan’s AK Party fell behind the main opposition Republican People’s Party, known as CHP, in Sunday’s municipal elections for the first time ever, according to early results published by state broadcaster TRT.
• Poll results show voters turned against the ruling party in much of the country, but the change was more dramatic in urban areas. That was mainly due to persistently high inflation even after Erdogan allowed the central bank to raise the nation’s key interest rate to 50%, the highest level since the ruling party first came to power in 2002. While higher lending costs resulted in a slump in consumer sentiment, they have yet to reverse the trajectory of price increases, which are running at an annual rate of just under 70%.
• “Voters appear to have punished his party and candidates for economic hardships at the municipal elections,” Emre Peker, Europe director for Eurasia Group, said of the president. “Erdogan is no longer immune to voter concerns over the economy, which he most recently sidestepped in May 2023 to secure reelection.”

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