Turkey: AKP wins election, but loses 13-year parliamentary majority
June 9, 2015
President Recep Tayyip Erdogan and the governing Justice and Development Party (AKP) were dealt a significant blow in 7 June’s parliamentary elections, when AKP lost the parliamentary majority it has held since 2002. Preliminary results show that AKP won 41% of the vote, which translates into 256 seats in the 550-seat parliament. The result was notably less than the 327 seats AKP won in the last general election as well as the 276 seats required for a majority government. Moreover, this was far below the 330 seats Erdogan had been campaigning for, which are required to hold a referendum on constitutional change. With the loss of support, it is unlikely that the AKP will be able to fulfill its top electoral priority of switching from the current parliamentary system of government to a presidential system.
The main opposition, the Republican People’s Party (CHP), came in second, winning 25% of the votes and 132 seats in the parliament, which was similar to the party’s result in the previous election. Coming in third was the Republican People’s Party (MHP), which fared better than in the last election. MHP received 16% of the votes and 82 seats in parliament. The driving factor behind AKP’s loss of support, however, was the emergence of the pro-Kurdish People’s Democratic Party (HDP), who entered parliament for the first time by surpassing the relatively-high 10% threshold of votes required. HDP came in fourth, winning 13% of the vote (80 seats). This is the first pro-Kurdish party ever to be represented in parliament, thus shaking up Turkey’s political landscape.
Political uncertainty has risen in Turkey as no party won a majority of seats. AKP will now have to look for coalition partners with whom it can form a government or attempt to form a minority government with outside support. There is a large possibility that negotiations may be drawn out or that no coalition will be formed due to major ideological and political differences between the parties. If no government is formed within 45 days, Erdogan has the right to call another election. The increased uncertainty drove the value of the lira to plummet the day after the elections. It closed 8 June at 2.75 TRY per USD, which represented a 2.1% depreciation over the same day of the previous month and a new record low. While the lira’s volatility indicates that the market has not reacted positively to the election result, Vladimir Miklashevsky, Economist at Danske Bank comments:
“We would like to stress that the election results are not necessarily that bad for the long-term outlook for reforms in Turkey. First of all, while AKP used to be a strong force for economic reforms in Turkey, this has not been the case in recent years. Secondly, had AKP won an overall majority, there would have been a risk that it would have tried to change the Turkish constitution to give bigger power to the president. President Erdogan in recent years has hardly been a voice for economic reforms.”
Going forward, a large amount of uncertainty remains regarding whether a stable government will be formed and what direction economic policy would take under a coalition. In addition, Turkey’s economic prospects have been clouded by lackluster data. The economy lost steam last year, weighed down by a contraction in fixed investment and sluggish private consumption. While the fall in oil prices should help reduce the country’s current account deficit this year, FocusEconomics Consensus Forecast panelists downgraded Turkey’s outlook the past two months against a backdrop of faltering economic growth, high inflation levels and rising political uncertainty. This month, panelists took a wait-and-see-approach and left their growth projections for 2015 unchanged. The panel expects GDP to expand 3.2% this year and pick up to a 3.7% increase in 2016.