Turkey's opposition stuns in sweeping local elections victory over Erdogan's party

Turkey's opposition won a stunning victory across several major cities in the country's local elections Sunday, dealing a severe blow to President Recep Tayyip Erdogan's ruling party and handing it its largest defeat in more than two decades.

"Those who do not understand the nation's message will eventually lose," Istanbul Mayor Ekrem Imamoglu told thousands of supporters after vote counts revealed that his center-left Republican People's Party, or CHP, had won the megacity of Istanbul by more than 1 million votes, Reuters reported.

"Tonight, 16 million Istanbul citizens sent a message to both our rivals and the president," he said.

Erdogan's conservative Justice and Development Party, abbreviated locally as AKP, dominates the country at the national level.

In a speech Sunday night, Erdogan admitted his party had "lost altitude" and would work to rectify its errors.

"If we made a mistake, we will fix it ... if we have anything missing, we will complete it," he said from the balcony of the presidential palace, according to a Reuters translation. Erdogan, 70, has governed Turkey since 2003.

The sweeping opposition win in municipal elections across major Turkish cities like Istanbul, Izmir and the capital Ankara could set the country in a new direction. Erdogan himself rose to prominence as Istanbul's mayor in the 1990s before later going on to win the presidency; now, analysts are speculating that Imamoglu's victory in Istanbul could make him a front-runner for the Turkish presidency in 2028.

Erdogan himself once said that whoever wins Istanbul wins Turkey. 

Imamoglu, a 52-year-old former businessman, has been Istanbul's mayor since 2019. He attempted to run for president in Turkey's 2023 general election, but was banned by Erdogan's government from running, in a move CHP supporters say was purely political. In those elections, Erdogan's party won big, leaving AKP on top at the national level.

Roughly 61 million voters were eligible to cast their votes for mayors, council members and other administrative leaders across Turkey's 81 provinces. Voter turnout was registered at 76%, according to the country's state-run Anadolu news agency. It said CHP came out ahead in 36 of 81 provinces, including several of Turkey's largest cities.

Turkey's economy has been on a downward spiral since 2018, battling severely high inflation, a weak currency and struggling foreign currency reserves. Annual inflation in the country of 85 million was recorded at 67% for the month of February, and Turkey's national interest rate sits at 50% — with both figures causing significant pain for the ordinary Turkish consumer.

"Disastrous results for the ruling AKP — failing to win major cities and perhaps even losing national vote to the opposition CHP," Timothy Ash, senior emerging markets strategist at BlueBay Asset Management, told CNBC. "This result is all about inflation."

Arda Tunca, an Istanbul-based economist, made a similar assessment.

"In 2019, AKP lost major cities due to the effects of the 2018 [economic] crisis, because the crisis was felt mainly in big cities. Now, the threat of impoverishment and unemployment has spread throughout the country," he said on X.

Crucially, Tunca said, Sunday's election result was the "first since 2002, when the AKP first time came to power, in which economic factors had outweighed identity-related factors."

Turkey's lira was trading at 32.43 to the dollar Monday morning in Istanbul, hovering around its record low against the U.S. currency. The beleaguered Turkish note has lost 40% of its value against the dollar in the past year, and nearly 83% in the last five years.

The election results "could be a gamechanger for Turkey," Hakan Akbas, a senior advisor at the Albright Stonebridge Group, told CNBC.

"It could breathe new life into Turkey's democracy and bring fresh perspectives on tackling economic woes, city planning, and public services. But that's a big if," he said.

Many election watchers predicted this race would be a struggle for the country's opposition, which is comprised of the CHP and a number of other parties, many of which have disparate aims and strategies. So the massive victory, for many, came as a surprise.

"Success will hinge on the opposition's ability to come together as a united front and pitch a vision for Turkey's future that resonates across the board," Akbas said. The election outcomes are also "crucial for the trajectory of Turkey's fiscal policies," he added, "potentially ushering in needed, albeit unpopular, reforms."

Opposition supporters are also hailing what they say is a win for democracy, having previously expressed concerns that increasingly autocratic tendencies from Erdogan's government and his control over the vast majority of Turkish media had severely slanted the political playing field.

But while Erdogan's opponents are celebrating the weekend's result, it's still by no means the end of the road for the Turkish president and his hold on power, some analysts note.

"The electoral upset in today's local elections will make it harder for Erdogan to push through his planned self-serving constitutional changes, but it is not a political game changer," Wolfango Piccoli, co-president at advisory firm Teneo Intelligence, wrote in an analysis note. "It would be naïve and erroneous to assume that this setback marks the beginning of the end for Erdogan."

The long-standing Turkish leader "will not move towards greater political accommodation given his aversion to share power and will not tone down his polarizing rhetoric due to this stinging defeat," Piccoli wrote.

"Rather, he is likely to respond forcefully (but not necessarily immediately) to the challenges posed by the opposition's victory in the local elections. In this regard, Erdogan is unlikely to abandon his plans for a new constitution or for significant amendments to the current charter," he added, referring to planned constitutional changes that would strengthen and extend the executive's power at the expense of opponents and other branches of Turkey's government.