The Istanbul local election rerun, held last Sunday (23 June), resulted in a clearer victory for Ekrem Imamoglu, the opposition mayoral candidate, who beat Binali Yıldırım from the ruling AKP with 54% vs. 45% of the vote, thereby widening his winning margin to about 775,000 from 14,000 votes in the March election. Yildirim, as well as President Erdogan on behalf of the AKP, conceded defeat and congratulated Imamoglu on the victory. Markets initially rallied after the outcome, perhaps hoping the government will now shift its attention to much needed economic reforms as Turkey has a rare four-year window of opportunity to do so before the next elections are scheduled. However, there is also a risk of early elections in the next two years. One trigger could be that Sunday’s outcome might trigger an AKP splinter movement as apparently some AKP heavyweights were against the Istanbul election rerun. Another reason could be that the AKP loses parliamentary support from the MHP, its junior coalition partner. In any event, expect Turkish politics to remain turbulent.
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Weekly Export Risk Outlook 26 June 2019