CHP Leadership Crisis Threatens Disinflation Trajectory in Turkiye
Bottom Line: Political tensions remain high in Turkiye after the 36th Civil Chamber of the Ankara Regional Court of Justice annulled the opposition Republican People’s Party (CHP) 2023 leadership congress on May 21, 2026. The ruling removed elected CHP chairman Ozgur Ozel from his leadership position, replacing him with former leader Kemal Kilicdaroglu. This turmoil triggered a shock, resulting in a 5% drop in the Istanbul stock exchange and a 2% plunge in the Turkish lira (TRY). Combined with geopolitical tensions involving Iran and inflationary pressures, the erosion of investor confidence and stability could threaten to derail the disinflationary trajectory.
Political tensions remain high in Turkiye after 36th Civil Chamber of the Ankara Regional Court of Justice annulled the main opposition Republican People’s Party (CHP) leadership congress in 2023 on May 21, 2026. The court declared the 2023 congress an absolute nullity and ordered that a new congress be organized, subsequently rejecting the CHP's initial appeal against the decision on May 22 as well.
The tension peaked after the police removed CHP headquarters from Ozel and his supporters who refused to vacate the party headquarters, calling the ruling a judicial coup. CHP chairman Ozgur Ozel recently condemned the ruling as a direct assault on democratic principles, arguing it undermined both the CHP and the fundamental voting rights of citizens. He charged the ruling Justice and Development Party (AKP) with manipulating the legal system to divide a resurgent opposition that it failed to beat at the polls. Meanwhile, the AKP dismissed these allegations and said the court acted independently to fix internal party violations and protect the rule of law.
Following mentioned incidents, Turkish stocks and the TRY plummeted in the last couple of days. Currency was down around 2% against the USD, and Istanbul stock exchange tumbled around 5%.
Elevated political risks are expected to keep the Turkish economy under pressure. This domestic turmoil, combined with the ongoing conflict involving Iran and inflationary pressures, would threaten to disrupt the disinflationary trajectory due to an erosion of investor confidence and macroeconomic stability. Consequently, we expect the Central Bank of the Republic of Turkiye (CBRT) will likely adopt a cautious monetary stance in H2.
It is difficult to foresee how things will evolve and affect the domestic economy in the next months due to political uncertainties. Turkiye’s next election is due in May 2028 but could come sooner if AKP decides to trigger a snap election in autumn 2026.