Turkiye is currently facing a significant political upheaval following the arrest of Istanbul Mayor Ekrem İmamoğlu, a key figure in the opposition against President Recep Tayyip Erdoğan. İmamoğlu was taken into custody on March 19, 2025, on charges of corruption, leading to widespread protests across the country and prompting serious concerns about the potential implications for the Turkish economy.
On March 24, 2025, in a statement supporting his government's economic program, Erdoğan firmly declared, "We will never allow the gains we have made from the economy program implemented in the last two years to be harmed." His words come amidst a backdrop of instability that has seen the Turkish lira, shares, and bonds experience sharp declines since İmamoğlu's arrest. Just two days after his jailing, protests erupted, described by Erdoğan as a "movement of violence." The government's immediate response included raising the overnight lending rate by two percentage points to 46% and imposing a short-selling ban on the Istanbul Stock Exchange.
Following these developments, the Turkish economy saw fluctuations, sparking a series of meetings between the Treasury and Finance Ministry, the Central Bank, and key market participants. Finance Minister Mehmet Şimşek indicated that these actions aimed to stabilize the financial markets. "With lira-settled forward foreign exchange sales, the aim is to reduce market volatility and enhance predictability," Şimşek tweeted, reflecting on the steps taken to boost confidence in the struggling economy.
Despite the chaos, some signs of recovery emerged. On March 24, the Istanbul Stock Exchange had a noteworthy rebound, closing nearly 3% higher, which signaled a temporary calming of investor nerves post-protest. Comparatively, the Borsa Istanbul benchmark index experienced its most severe drop of 16.6% in the previous week—the worst since the financial crisis of 2008—putting additional pressure on the current administration.
Erdoğan emphasized that the government is adamant about protecting economic gains. In a cabinet meeting on March 24, he noted, "Our institutions have both the authority and the will to ensure healthy market mechanisms." This statement marked an effort to reassure both domestic and international investors about the resilience of the Turkish economy despite existing challenges.
The timing of these statements coincided with the scheduled teleconference on March 25, hosted by Citigroup and Deutsche Bank, featuring Şimşek and Central Bank Governor Fatih Karahan discussing the Turkish economy with international investors. This initiative serves as a critical platform to communicate the government's commitment to stabilizing financial conditions and addressing any concerns regarding market volatility.
The political climate in Turkiye, complicated by İmamoğlu's arrest, continues to be a source of tension.، Numerous opposition figures and European leaders have condemned the judicial actions against him, labeling them as politically motivated and undemocratic. Erdoğan’s administration, however, maintains that these actions are justified and that the judicial process is independent.
The government’s measures have included not only monetary policy adjustments but also significant liquidity injections, with over $14 billion aimed at stabilizing the Turkish lira amidst extreme fluctuations. Moreover, the Capital Markets Board has reacted by easing share buyback limitations and enforcing regulations such as bans on short-selling, actions deemed necessary to bolster investor confidence amid turbulent conditions.
As the government reassesses the economic landscape post-protests, all eyes remain on how effectively they will tackle the implications of İmamoğlu’s arrest and maintain public order while also addressing critical economic indicators. Erdoğan has affirmed a commitment to continue the economic program, stating, "In the upcoming period, we will continue our economic program without compromise, resuming from where we left off." The coming days will test this resolve as citizens and investors alike look for stability in the face of significant political strife.
The situation in Turkiye remains fluid, and as authorities respond to market conditions and public sentiment, the events of the past week may serve as a pivotal point for the nation’s political and economic future. The outcomes of the upcoming discussions among financial leaders will be essential in shaping confidence levels both domestically and internationally.
