The change at the top of the government should not be a game changer for Turkish politics in the short-term since Davutoglu had mostly felt into line with President Erdogan during his tenure. Still, this would keep Turkey’s governance mechanism open to dispute and harm Turkey’s accession process to the European Union while negotiations over visa-free pass going on which was supposed to mark a milestone in the history of country. Also, one would expect that steps toward a constitutional reform are to be taken faster than expected.
Interestingly, S&P does not see eventual constitutional reform leading significant policy changes such as intensification of intervention in the independence of Turkish central or nationalization of private sector banks. Since, we don’t even have any draft that frames a new constitution, it is hard to predict the implications for the economy. But for instance, in case of a completed transition towards a presidential system, most certainly only the President will be in charge of assigning the Central Bank Governor. This the most controversial point made in the S&P’s Turkey release.
The next report will be released on November 4, 2016.