Latest EM elections raise policy risks

The results of elections in major EMs over the past month have increased macroeconomic policy risks. Most notably in Turkey, President Erdogan now has the edge ahead of a second-round presidential election run-off next week. Hopes of an opposition victory and a return to orthodox policymaking have all but evaporated and the threat of a severe economic and financial crisis looms large. In India, defeat for the incumbent BJP in an important state election may weigh on the ruling national party’s appetite for economic reforms ahead of next year’s general election. Elsewhere, Thailand’s opposition parties performed well but they may struggle to form a new government under the terms of the 2016 military-crafted constitution. A return to protests and unrest is a real possibility.