Turkey votes for prosperity at local elections
The results certainly point to unwavering popularity of Erdogan and his ruling party AKP. Despite being challenged heavily and at times ruthlessly by the opposition in what became an openly conducted smear campaign against Erdogan's inner political and private circle, votes in support of AKP did not wane. AKP managed to reach and exceed its target of 40% of all votes.
Over 92% of 52 million people eligible to vote in Turkey turned out to vote on Sunday. Although there have been sporadic allegations of election-rigging and some hot tempers were observed, elections took place without any major incidents and polls were counted immediately into Sunday night.
So, what are the implications for Turkey - economically and politically?
Since assuming power in 2002, AKP has seen Turkey through several chapters of economic reforms, including major privatisations, strict monetary and fiscal policies that resulted in curbing inflation from over 80% to around 8%pa currently reported and delivering up to 8.9% year on year GDP growth in 2008 - 2013 periods. Turkey's exports and general welfare improved visibly under AKP.
From the inevitable collapse of 2001, that saw international companies wiping 45% off their balance sheet valuations overnight, Turkish Lira has come a long way in demonstrating a stable and strong currency for trade and international business. It was not until mid 2013 that the scenario started changing. Turkish Lira started to slide against USD, same as most emerging market currencies, due to US tapering of its quantitative easing program implemented back in 2008. As Russia, India and several other emerging markets recorded up to 35% losses in May - August 2013 period, Turkish Lira proved yet again more stable and managed to hold at around 20% drop.
However, following the launch of financial and political misconduct investigations on 17 December 2013 into the affairs of several AKP MP's and their relatives within the inner circle of the Prime Minister, Turkish currency dropped further recording an all time low against USD at almost 2.35. Various allegations of wrong-doings against prominent figures in the Parliament signalled political instability to the international markets, causing stocks and currency to depreciate further.
In order to rescue the fall of Turkish Lira, Central Bank hiked interest rates by 5% on 27 January 2014. The result was positive, further slide was prevented, however, the currency graph did not fully reverse to what it was prior to May 2013. There was still ongoing 'trust' issues and potential for political instability with anti-government voices being raised amongst general public and apparently harsh critics of Erdogan's style of governance (being increasingly authoritarian).
The above explain some of the reasons as to why these local elections were seen as far more important than just electing heads of constituents in Turkey. The elections were more of a barometer as to continued popularity and general 'trust' in Erdogan and his ruling party, a barometer, which now a day after the elections, strongly signals continued support and hence political stability.
On the morning of 31 March 2014, Turkish Lira opened against USD at 2.15, which is almost 5% up on prior week. It appears Turks voted for continued prosperity.