By Cagan Koc and Selcan Hacaoglu

(Bloomberg) --Turkish opposition candidate Ekrem Imamoglu won the redo of the Istanbul mayor’s race by a landslide on Sunday, in a stinging indictment of President Recep Tayyip Erdogan’s economic policies and increasingly autocratic ways.

According to state-run Anadolu news agency, Imamoglu of the CHP party won 54% of the vote, and the ruling AK Party’s candidate, former Prime Minister Binali Yildirim captured 45%, with more than 95% of ballot boxes opened. AK Party had narrowly lost the March 31 election, and the broad margin this time for the political upstart telegraphed undeniably that voters are concerned about the crumbling of Turkey’s democratic foundations and an economy reeling from a spike in consumer prices and unemployment.

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Yildirim conceded the election. Erdogan, who had challenged Imamoglu’s win in the original ballot, said last week that he would accept the outcome of the race but hinted that legal troubles could await the opposition candidate. Losing Istanbul is much more than ceding control of Turkey’s largest city and commercial powerhouse. The Istanbul mayor’s job was the springboard for Erdogan’s own political career, and if Imamoglu acquits himself well in the job, then the president may find himself with a future challenger.

“His performance would determine whether he can become a presidential rival” in June 2023 elections,” Ersin Kalaycioglu, a professor of social sciences at Istanbul-based Sabanci University, said before the election.

Money Pot

Defeat in Istanbul, home to about a fifth of Turkey’s 82 million people, also strips Erdogan’s party of a major source of patronage and handouts. By some estimates, the city absorbs a quarter of all public investment and accounts for a third of the country’s $748 billion economy.

The decisive nature of the win might put investors at ease. A narrow victory would have brought the legitimacy of the vote into question, Anastasia Levashova, a fund manager at Blackfriars Asset Management in London, said before the election.

One thing that may have tipped the scale so heavily in Imamoglu’s favor this time is the shift in sentiment among Kurdish voters. Some had sat out the original vote, but over the past week, the jailed former leader of the pro-Kurdish HDP party called on his followers to support Imamoglu.

“This guy may be the only one to unite opposition parties under one roof in so many years,” said Gizem Konak, 26, who had supported HDP in the past. “I think Imamoglu has the potential to change the destiny of this country.”

Imamoglu saw his popularity rise after election authorities unseated him after just 18 days in office, polls showed. In a last-ditch effort to tar him, Erdogan alleged that he was backed by enemy forces: the U.S.-based preacher the president accuses of mounting a failed 2016 coup attempt against him, and a party Erdogan sees as the political wing of the autonomy-seeking Kurdish PKK group Turkey’s been battling since the 1980s.

Erdogan also called for prosecuting Imamoglu for allegedly insulting a provincial governor. The Turkish leader himself lost his seat as the mayor of Istanbul after he was imprisoned for four months in 1999 for reciting an Islamic poem deemed a threat to Turkey’s secular order.

Not Over

An Imamoglu win doesn’t necessarily mean an end to Turkey’s political turmoil. AKP members dissatisfied with Erdogan’s policies may be emboldened to split off. The ruling party has been losing support since Erdogan was sworn in with sweeping new powers after last year’s election.

The outcome could also touch off an early presidential vote to prevent Imamoglu from gaining political traction, Murat Gezici, head of the Gezici polling company, said before the vote.

It could “create political havoc within the ruling AK party, possibly leading to the formation of new political parties and bringing about early elections later this year or early next,” Gezici said.

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Even though AK Party has lost Istanbul, Erdogan would have other levers of power to assert his will over the city. The party commands a majority on the municipal council, and together with an ally, leads 25 of Istanbul’s 39 districts.

More than 10 million people were eligible to vote, and the candidates put a priority on getting some of the 1.7 million who didn’t cast ballots in the last round to go to the polls. The March tally gave Imamoglu a margin of just 14,000 votes.

Erdogan’s party had already lost the capital, Ankara, and some other big cities in the March balloting as inflation, unemployment and a plunge in the lira took their toll. But he refused to concede defeat in Istanbul, crying voter fraud, and Turkey’s top election board concurred.

After the board’s decision in May, the lira weakened the most in emerging markets and stocks were battered as investors fretted over what they saw as the erosion of the rule of law. Although unemployment has stabilized, the economy remains in distress, with a double-dip recession threatening. The market craves a break from the never-ending electoral cycle that could finally shift the focus to economic reforms.

Bloomberg