Imamoglu’s arrest ‘freezes’ Turkish economy, derailing recovery

The arrest of Istanbul’s mayor has reversed the positive course the country had embarked upon. A study by the EBRD confirms that boycotts and protests have disrupted efforts to curb inflation, triggering "turmoil". In April, the Central Bank raised interest rates after months of holding steady. New arrests among university students have followed clashes with police.

Istanbul (AsiaNews) – Turkey’s international activism and that of President Recep Tayyip Erdoğan—as a mediator in crisis scenarios including the war in Ukraine (with today’s meeting between Kyiv and Moscow for a potential ceasefire, despite the absence of Russian President Putin)—have not been enough to mask a growing authoritarian drift. This trend is now visibly impacting the economy as well as civil rights.

A key example is the arrest of Istanbul’s mayor and opposition leader, Ekrem Imamoglu, on (arbitrary) charges of corruption—an act that underscores Ankara’s increasingly authoritarian approach to power. The move sparked fierce public outcry, with the majority of the population now backing the mayor of Turkey’s economic and commercial capital.

The domestic fallout has had tangible consequences for growth: strikes and boycotts in support of Imamoglu have disrupted the country’s path towards reducing inflation, affecting finances, trade, and foreign currency reserves—according to a study by the European Bank for Reconstruction and Development (EBRD).

Imamoglu’s detention, followed by his popular endorsement as opposition leader and presidential challenger in a landslide primary vote, triggered a collapse in the Turkish lira and turmoil in financial markets. In response, the Turkish Central Bank unexpectedly raised interest rates in April, abruptly ending a previously encouraging cycle of monetary easing that had begun earlier in the year.

Before the arrest, Turkey had been making “slow but steady” progress in lowering inflation, EBRD chief economist Beata Javorcik told Reuters. “That process allowed interest rates to be cut,” she added, “but it has now been halted by recent political developments, which have led to turmoil and forced the central bank to reverse course.”

Javorcik confirmed that the rate hike had an immediate negative effect on growth. “This is costly—in terms of economic performance, in terms of reserves, and in terms of reputational implications, undermining investor confidence,” she warned.

In recent years, Ankara has grappled with soaring inflation, which peaked at 75% in May last year. As a result, the central bank has lowered its 2025 economic growth forecast for Turkey by 0.2 percentage points to 2.8%, citing weaker domestic and international demand and a tighter-than-anticipated monetary policy stance.

Prior to Imamoglu’s detention, Turkish bonds and equities had become highly attractive to global asset managers. The appointment of Finance Minister Mehmet Simsek in 2023—seen as the architect of Turkey’s return to more orthodox economic policies—had helped restore investor confidence.

According to the EBRD report, Turkey’s Central Bank sold over billion in foreign currency in the weeks following Imamoglu’s arrest, causing net reserves (excluding swaps) to plunge from over billion to under billion. The latest data, published on 12 May, show that Turkey’s gross reserves have increased by billion—the first such gain in nearly two months.

Meanwhile, the Turkish government has tightened restrictions on Imamoglu, held in Silivri prison, by blocking his X (formerly Twitter) account. In his final post, the mayor had urged supporters to join a Republican People’s Party (CHP) rally at Istanbul University. Tens of thousands responded, and he later shared footage of the gathering on the platform.

The Istanbul prosecutor’s office justified the measure by claiming that the shared content could constitute “incitement to commit crimes”, and said the profile had been blocked for reasons of national security and public order. In response, Imamoglu and his legal team have started using TikTok, while the CHP has launched a new official profile titled “Office of the Presidential Candidate.”

In recent days, there have also been fresh arrests among university students, one of the most active demographics in recent protests. On 13 May, local sources report, police detained 97 students at Istanbul’s Bogazici University for protesting a campus conference led by Islamic preacher Nureddin Yildiz, known for his controversial views on early marriage and “child brides”, which he defends.

Students reportedly tried to break through police lines, resulting in clashes in which at least 13 officers were injured, according to Istanbul Governor Davut Gul.