Turkey’s prime minister, Recep Tayyip Erdogan, looked set for victory in Sunday’s parliamentary election – but without enough votes to push unilaterally for a new constitution.
With 50 per cent of the votes counted, the ruling Justice & Development party (AKP) was on 53 per cent. That could leave the AKP with 327 seats, four fewer than in the last parliament – but more than enough to retain power. It’s in line with predictions. If confirmed, a market-friendly result.
As Delphine Strauss reported from Ankara for the FT, after nine years in which Turkey has become steadily richer and more influential on the world stage, the AKP was all but certain to win a fresh mandate. Erdogan’s populist rhetoric, authoritarian behaviour and conservative values may worry city sophisticates and liberals, but he remains a hero to many in poorer urban areas, villages and an up-and-coming middle class.
Reuters reported that if the partial results based on 90 percent of the vote are confirmed the AK would be forced to seek agreements with other parties to press on with plans to replace the existing charter, written almost 30 years ago during a period of military rule.
Based on the incomplete count, AK looked set to win 327 seats, just below the 330 required for a plebiscite and less than the 331 it had in the last parliament, according to broadcaster CNN Turk, said Reuters.
It should all please investors, who, while always betting on an Erdogan victory, showed a few signs of nerves in recent days, as beyondbrics has reported.
Simon Quijano-Evans, chief economist, EMEA, at ING Bank, said in a note on Sunday that it should boost the currency and Turkish stocks. He wrote:
Markets will be pleased with the outcome in our view, especially as the results do show that there is an opposition in place, and given the generally benign short-term backdrop (less oil price hype, increased tourism revenues, non-hawkish G3 central banks vs a likely more hawkish CBT), we expect to see the TRY strengthen this week, while equities should outperform peers.
A key question is whether the central bank will now review the unorthodox monetary policy since the year-end, tackling inflation by imposing controls on bank lending but without raising interest rates so as to avoid sucking in more foreign capital. The jury is out as to whether it has worked or not in economic terms. It may still be too early to say.
But with the election out of the way, any political factors that contributed to the decision to avoid interest rates hikes, may fade. Some economists expect that the central bank may now switch tack and raise rates, while keeping in place quantitative controls.
via Turkey: market to welcome AKP win | beyondbrics | News and views on emerging markets from the Financial Times – FT.com.
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