Turkey's President, Recep Tayyip Erdogan, has taken an oath for his second five-year term in parliament. Erdogan's swearing-in ceremony took place hours before he announced his new cabinet. The inauguration ceremony was attended by several dignitaries, including NATO Secretary General Jens Stoltenberg and Armenian Prime Minister Nikol Pashinyan.
Erdogan's victory, which secured 52% of the vote in a runoff election, comes at a time when Turkey is facing significant challenges such as a cost-of-living crisis and a plummeting lira. Investors are also awaiting clarity regarding the path forward for Turkey's $900 billion economy. As such, the cabinet that Erdogan will announce later is expected to prioritize the normalization of economic and foreign policies while trying to win back some of the country's major cities from the opposition in local elections next year.
One of the main concerns for the market will be who will lead the president's economic team and foreign policies. In his victory speech, Erdogan promised to appoint an economic team that has "international credibility." The President is set to appoint Mehmet Simsek, a former Merrill Lynch strategist who has held positions as both finance minister and deputy prime minister in previous Erdogan cabinets, as the new treasury and finance minister. Simsek's appointment is expected to bring about a normalization of Turkey's policies after years of unorthodox moves that led to runaway inflation and a slump in the lira.
At present, the Turkish government is also under pressure from the United States to ratify Sweden's bid to become a member of NATO. This comes as Turkey has requested to purchase American-made F-16 fighter jets. Washington has hinted that the ratification of Sweden's membership could increase the chances of the US granting Turkey the aircraft purchase agreement it is seeking.