<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107204874-1678259915861-GettyImages-1243868217_1-820x462.jpg" alt="" class="wp-image-425241" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107204874-1678259915861-GettyImages-1243868217_1-820x462.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107204874-1678259915861-GettyImages-1243868217_1-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107204874-1678259915861-GettyImages-1243868217_1-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107204874-1678259915861-GettyImages-1243868217_1-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107204874-1678259915861-GettyImages-1243868217_1.jpg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



The International Monetary Fund has yet to see enough banks pulling back on lending that would cause the U.S. Federal Reserve to change course with its rate-hiking cycle.



“We don’t yet see a significant slowdown in lending. There is some, but not on the scale that would lead to the Fed stepping back,” the IMF’s Managing Director Kristalina Georgieva told CNBC’s Karen Tso Saturday in Dubrovnik,&nbsp;Croatia.



The&nbsp;Federal Reserve in a May banks report&nbsp;warned that lenders are worried about conditions ahead, as&nbsp;trouble in mid-sized financial institutions in the U.S.&nbsp;caused banks to tighten lending standards for households and businesses.



The Fed’s loan officers added that they expect the issues to continue over the next year due to lowered growth forecasts and concerns over deposit outflows and reduced tolerance for risk.



Georgieva told CNBC: “I cannot stress enough that we are in an exceptionally uncertain environment. Therefore pay attention to trends and be agile, adjusting&nbsp;—&nbsp;should the trends change.”



The IMF’s commentary on the pace of a slowdown in global lending comes after its&nbsp;Chief Economist Pierre-Olivier Gourinchas told CNBC&nbsp;in April that banks are now situated in a “more precarious situation” that would pose a risk to the international organization’s world growth forecast of 2.8% for this year.



A majority of major global central banks, including the U.S. Federal Reserve, have tightened their monetary policy aggressively to tame soaring inflation. Meanwhile, the&nbsp;world’s global debt has swelled to a near-record high of $305 trillion, according to the Institute of International Finance. The IIF said in its May report that high debt levels and interest rates have led to further concerns about leverage in the financial system.



<h2 class="wp-block-heading" id="h-a-little-bit-more"><a></a>‘A little bit more’</h2>



As the IMF is yet to see a significant slowdown in lending that would prompt the Fed to reverse its course, Georgieva said that combined with a&nbsp;resilient U.S. jobs report&nbsp;on Friday, that it could hike further.



“The pressure that comes from incomes going up and in unemployment being still very, very low, means that the Fed will have to stay the course and perhaps in our view, they may need to do a little bit more,” she said.



She projected the U.S. unemployment rate to go beyond 4%, up to 4.5%, from more rate hikes by the Fed after the rate rose to 3.7% in May, marking the highest since October 2022.



On the U.S. government&nbsp;passing a debt ceiling bill&nbsp;that was signed by President Joe Biden over the weekend, she said: “what has been agreed, in the context [that] it was agreed, is broadly speaking, a good outcome.”



“Where the problem lies is that repetitive debate around the debt ceiling, in our view, is not very helpful. There is space to rethink how to go about it,” she added.



— CNBC’s Jeff Cox, Elliot Smith contributed to this report

107204874-1678259915861-GettyImages-1243868217_1

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="527" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-820x527.jpg" alt="" class="wp-image-425211" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-820x527.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-300x193.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-140x90.jpg 140w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-768x493.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-1536x986.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107247948-1685449467708-GettyImages-1258270878-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">ABUJA, Nigeria &#8211; May 29, 2023: Nigeria’s President-elect Bola Ahmed Tinubu arrives to attend swearing-in ceremony at Eagle Square in the capital. Tinubu inherits a fractured society a crippled economy as he takes the reins of Africa’s most populous nation. Emmanuel Osodi/Anadolu Agency via Getty Images</figcaption></figure>



New Nigerian President Bola Ahmed Tinubu faces the tough task of injecting stability into a society and economy in crisis — and reigniting hope in a young population that feels its voice has been ignored for decades.



The 71-year-old was sworn in on Monday as the 16th president of Africa’s most populous nation, and its fifth since the end of three decades of military rule in 1999. He succeeds Muhammadu Buhari, also of the All Progressives Congress (APC) party, who departs with a widely criticized economic record.



Meanwhile, judges are considering a legal petition from opposition leaders, Atiku Abubakar of the Peoples Democratic Party (PDP) and Peter Obi of the Labour Party, alleging fraud and challenging the result of February’s presidential election.



Tinubu inherits an economy saddled with record debt and inflation at an almost two-decade high of more than 22%, along with shortages of foreign exchange reserves and fuel, a severely weakened naira currency, an ailing power supply and declining oil production.



<h3 class="wp-block-heading" id="h-economic-turmoil">Economic turmoil</h3>



As former governor of Lagos state between 1999 and 2007, Tinubu was credited with modernizing Nigeria’s commercial hub and vastly expanding the regional economy.



Touting his record, he vowed at his swearing-in ceremony on Monday to expand the Nigerian economy by at least 6% per year, unify the the foreign exchange rate and scrap costly fuel subsidies, along with tackling widespread insecurity.



“I have a message for our investors, local and foreign: our government shall review all their complaints about multiple taxation and various anti-investment inhibitions,” Tinubu told the audience in Abuja’s Eagle Square, while also promising a “thorough house cleaning” of monetary policy.



His predecessor Buhari deployed a series of protectionist economic policies and spooked international investors. While he claimed in a farewell speech on Sunday that many of the “tough decisions” had boosted the country’s economic resilience, the hard data showed unemployment and poverty expanding.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="405" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107201372-1677652515925-GettyImages-1247464632.jpg" alt="" class="wp-image-425212" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107201372-1677652515925-GettyImages-1247464632.jpg 720w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107201372-1677652515925-GettyImages-1247464632-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107201372-1677652515925-GettyImages-1247464632-160x90.jpg 160w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption class="wp-element-caption">ABUJA, Nigeria &#8211; Feb. 25, 2023: A party observer argues with an official of the Independent National Electoral Commission (INEC) as ballot boxes are reportedly set up in the wrong polling station in Abuja. Michele Spatari/AFP via Getty Images</figcaption></figure>



Nigeria’s National Bureau of Statistics now estimates that 63% of the population, around 133 million people, are now classed as multidimensionally poor, a 10 percentage point increase from before Buhari’s tenure began in 2015. Unemployment sits at 33.3%, amounting to more than 23 million people, having risen steadily over the last eight years.



Samson Itodo, executive director of Nigeria-based civic advocacy organization YIAGA Africa, told CNBC that he expects the country to move past the process of legal challenges with minimal disruption, but that Tinubu’s administration faces multiple obstacles in its first 60 days.



<h2 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2023/nigerias-tinubu-gets-his-turn-as-president-familiar-problems-await/">Nigeria’s Tinubu gets his turn as president, familiar problems await</a></h2>



“He is inheriting a broken economy, he is inheriting a broken country, very polarized around religious and ethnic lines, and so there’s a lot of expectation that being the Tinubu that he is, he is going to take on this responsibility, but I do believe Nigeria will pull out of this because of our resilient character,” Itodo said Monday.



Though popular, the decades-old subsidy for petroleum products has been a millstone around the neck of government finances, and several governments have promised but failed to eradicate it since its implementation in the 1970s.



Itodo said the first couple of months of Tinubu’s tenure would be key in restoring economic credibility with an electorate that has endured two recessions in the last eight years, both through delivering on bold campaign promises and appointing “competent people” with the necessary experience.



<h3 class="wp-block-heading">A country divided</h3>



Nigeria has one of the world’s fastest-growing populations — currently near 220 million and forecast to double by 2050. It also has one of the world’s youngest average populations, with 42% of citizens under the age of 15 and a median age of just over 18, the U.N. estimates.



Ahead of February’s election, the Labour Party’s Peter Obi mobilized popular discontent over widespread youth unemployment, lack of opportunity and police brutality to engage vast swathes of young voters who wanted a break from the country’s traditional two big parties, the APC and PDP.



Tinubu won just 37% of the national vote, while only a quarter of Nigeria’s 93 million registered voters managed to cast a ballot in a polling process beset by technical problems. For many disenfranchised Nigerians, he will have a tough task in proving his mettle on both economic and social issues.



Mucahid Durmaz, senior West Africa analyst at risk intelligence firm Verisk Maplecroft, said Tinubu’s presidency will be seen by many disillusioned voters as strengthening the “dominance of the entrenched political elite.”



“Tinubu’s electoral victory has further ingrained the perception among ordinary Nigerians that the political stage is a playground for wealthy old guards who place patronage at the heart of politics,” Durmaz said.



“The extensive clientelist networks and powerful regional brokers behind his victory will likely be rewarded with state positions at national and federal level.”



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="405" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/106773420-1604303946701-GettyImages-1229172325.jpg" alt="" class="wp-image-425213" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/106773420-1604303946701-GettyImages-1229172325.jpg 720w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/106773420-1604303946701-GettyImages-1229172325-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/106773420-1604303946701-GettyImages-1229172325-160x90.jpg 160w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption class="wp-element-caption">Protesters take a knee to honour the lives of those lost to the police brutality happening in the country at the Murtala Muhammed airport tollgate, during ongoing protest against the unjust brutality of The Nigerian Police Force Unit, the Special Anti-Robbery Squad (SARS), at Obafemi Awolowo way, Ikeja, Lagos on October 19, 2020. Benson Ibeabuchi/AFP via Getty Images</figcaption></figure>



A key question for the first 100 days in office, Durmaz suggested, will be whether the new leader has the “will and the ability” to reach out to alienated urban youth and minorities.



“Tinubu will need to promote an inclusive national identity in a deeply fractious society and eradicate the grievances felt by the majority of Nigerians on issues such as insecurity, police brutality and inequality,” Durmaz said.



Tinubu vowed to address widespread violence — including killings and kidnappings in the northwest, clashes between cattle herders and farmers in the country’s “Middle Belt” and a combination of separatist and gang-based attacks in the southeast — through sweeping reforms of Nigeria’s security services.



“Nigeria’s over-stretched state security apparatus has a history of grave human rights violations and requires wide structural reforms, comprehensive training programs and modern equipment,” Durmaz said.



“Any improvement in the military must be followed by economic development plans in violence-affected areas to stem the main drivers of insecurity, namely poverty, youth unemployment and the lack of state presence.”

107247948-1685449467708-GettyImages-1258270878

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-820x547.jpeg" alt="" class="wp-image-425198" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Elon Musk is the wealthiest person in the world again. Michel Euler | AFP | Getty Images</figcaption></figure>



Elon Musk is the richest person in the world again, according to Bloomberg Billionaires Index’s updated figures Thursday.



The Tesla CEO saw his wealth jump 40.3% this year to $192 billion, after shares of the electric car maker rose about 24% in May, according to Eikon data. Musk owns about 13% of Tesla, according to FactSet data.



Musk was knocked out of first place by LVMH CEO Bernard Arnault in December, after shares of Tesla fell after his $44 billion acquisition of Twitter. Most of Musk’s wealth is tied to Tesla’s stock.



He is also the CEO of rocket manufacturer SpaceX and owns social media company Twitter.



Musk left Shanghai on Thursday, after a high-profile two-day visit. While in China, he met with foreign minister Qin Gang and other Chinese officials. The visit, which comes amid simmering U.S.-China tensions, was a sign China is an important market to Tesla, analysts have said.



During the visit, Qin sought to assure Musk that China is open to foreign businesses and would continue to offer a friendly business environment to them. Musk also reportedly signaled further expansion in China.



Shares of Tesla closed 1.38% higher on Wednesday at $203.93.



Tesla’s stock hit a two-year low in November when its share price dropped to $167.87, the lowest since November 2020. It was in part due to a sell-off that accelerated in the wake of Musk’s takeover of Twitter.



LVMH’s Arnault now trails behind Musk as the world’s second richest man at $187 billion, followed by Jeff Bezos, the billionaire founder of Amazon, according to Bloomberg data.

107241090-1684160036619-gettyimages-1255019394-AFP_33F44YL

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-820x547.jpg" alt="" class="wp-image-425166" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/Top-AI-CEOs-experts-raise-risk-of-extinction-from-AI-Reuters-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The logo of OpenAI is displayed near a response by its AI chatbot ChatGPT on its website, in this illustration picture taken February 9, 2023. REUTERS/Florence Lo/Illustration/File Photo</figcaption></figure>



Artificial intelligence may lead to human extinction and reducing the risks associated with the technology should be a global priority, industry experts and tech leaders stated in an open letter.



“Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war,” the statement on Tuesday read.



Sam Altman, CEO of ChatGPT-maker OpenAI, as well as executives from Google’s AI arm DeepMind and Microsoft were among those who supported and signed the short statement from the Center for AI Safety.



The technology has gathered pace in recent months after chatbot ChatGPT was released for public use in November and subsequently went viral. In just two months after its launch, it reached 100 million users. ChatGPT has amazed researchers and the general public with its ability to generate humanlike responses to users’ prompts, suggesting that AI could replace jobs and imitate humans.



The statement Tuesday said that there has been increasing discussion about a “broad spectrum of important and urgent risks from AI.”



But it said it can be “difficult to voice concerns about some of advanced AI’s most severe risks” and had the aim of overcoming this obstacle and opening up the discussions.



ChatGPT has arguably sparked much more awareness and adoption of AI as major firms around the world have raced to develop rival products and capabilities.



Altman had admitted in March that he is a “little bit scared” of AI as he worries that authoritarian governments would develop the technology. Other tech leaders such as Tesla’s Elon Musk and former Google CEO Eric Schmidt have cautioned about the risks AI poses to society.



In an open letter in March, Musk, Apple co-founder Steve Wozniak and several tech leaders urged AI labs to stop training systems to be more powerful than GPT-4 — which is OpenAI’s latest large language model. They also called for a six-month pause on such advanced development.



“Contemporary AI systems are now becoming human-competitive at general tasks,” said the letter.



“Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization?” the letter asked.



Last week, Schmidt also separately warned about the “existential risks” associated with AI as the technology advances.

Illustration picture of ChatGPT

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="577" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-820x577.jpeg" alt="" class="wp-image-425131" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-820x577.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-300x211.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-128x90.jpeg 128w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-768x540.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-1536x1081.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Turkish President Tayyip Erdogan meets with his Russian counterpart Vladimir Putin in Sochi, Russia August 5, 2022. Turkish Presidential Press Office | Reuters</figcaption></figure>



Turkey on Sunday voted for another five years of the leadership of Recep Tayyip Erdogan, the powerful, nationalist president who now enters his third decade in power.



Russian President Vladimir Putin was among the leaders that congratulated Erdogan on his win on Monday, calling him a “dear friend,” according to the Kremlin.



Turkey’s historical election is highly consequential for its population of 85 million, in terms of the future of the country’s democracy, economy and foreign relations. But it’s also deeply significant for many parts of the world beyond Turkey’s borders.



“Turkey is a vital, vital NATO ally for the United States and for the other NATO partners,” David Satterfield, former U.S. ambassador to Turkey, told CNBC just before the final presidential vote. Turkey has been a member of NATO since 1952, boasts the alliance’s second-largest military after the U.S. and houses 50 American nuclear warheads and a major air base used by NATO forces.



It’s a manufacturing powerhouse at the crossroads of Asia and Europe, as well as an important agricultural exporter for many countries around the world. Turkey also hosts more than 4 million refugees.



More recently, Erdogan’s government is playing a leading diplomatic role between Russia and Ukraine and mediating the crucial Black Sea grain deal, which unlocks vital Ukrainian produce exports blocked by Russia’s full-scale invasion.



Erdogan has also stood in the way of some of the major goals of Turkey’s Western allies, such as aggressively pushing back on Russia for its war in Ukraine, and allowing Sweden into the NATO alliance. Erdogan’s friendly relationship with Putin and refusal to impose sanctions on Russia, as well as his government’s purchase of Russian weapons systems, makes many Western officials uneasy.



Putin, in his congratulatory message Monday, praised Erdogan’s efforts to “conduct an independent foreign policy,” according to his spokespeople.&nbsp;“We highly appreciate your personal contribution to the strengthening of friendly Russian-Turkish relations and mutually beneficial cooperation in various areas,”&nbsp;he said.



With Erdogan at the helm of such a strategically vital country for a fresh new presidential term, many are asking: what does this mean for NATO and Western geopolitical goals?



<h2 class="wp-block-heading" id="h-a-threat-to-nato-cohesion"><a></a>A threat to NATO cohesion?</h2>



The outlook is mixed among political and economic analysts inside and outside of Turkey whether Erdogan is bad news for the future of NATO.



Mike Harris,&nbsp;founder of advisory firm Cribstone Strategic Macro, believes the Turkish strongman’s extended rule is decidedly negative for the 74-year-old alliance.



“Putin clearly wants NATO to fragment, and Erdogan in charge increases the likelihood of NATO fragmenting,” Harris said after the election’s first round in mid-May. He pointed to Erdogan’s staunch refusal to cut ties with Putin and to his frequent criticism of Western governments.



But Turkey has so far benefitted significantly from its commitment to an independent foreign policy, when it comes to Russia.



Turkey’s trade with Russia doubled to $68.19 billion in 2022 from $34.73 billion in 2021, according to the Turkish Statistical Institute. Turkey now receives 7% of Russian exports, up from 2% in 2021. Russian tourists and expatriates, including billionaire oligarchs escaping sanctions, have poured into the country as their options for travel became severely limited. Earlier in 2023, Putin waived the cost of Russian gas exports to Turkey, a move broadly seen as an effort to help Erdogan’s election chances.



This begs the question of what leverage NATO allies might try to use to change that, if any.



While maintaining good relations with Russia, Turkey has simultaneously supported Ukraine with weapons and aid — including the powerful and deadly Turkish-made Bayraktar drones — and facilitated prisoner swaps between the warring countries, which Western officials have praised.



<h2 class="wp-block-heading"><a></a>Will Turkey allow Sweden into NATO?</h2>



Many analysts expect that Erdogan’s opposition to Sweden joining the alliance was largely a strategy to gain pre-election clout and that his stance will change following his victory. Turkey takes issue with Sweden over what it says is the country’s support of Kurdish groups that Ankara considers to be terrorists.



For Timothy Ash, an emerging markets strategist and Turkey expert at BlueBay Asset Management, a continued pushback against NATO goes against Turkey’s best interests.



“If Erdogan continues to stall sign off (on Swedish NATO membership), I expect a major crisis in relations with the West,” he said Monday.



“Because of pressure on the lira I expect Erdogan to compromise on Sweden’s NATO bid,” Ash said, referring to the Turkish currency that’s lost some 80% of its value against the dollar in the last five years, largely due to unorthodox monetary policies directed by Erdogan.



“He extracted whatever political capital he could from this (Sweden pushback) pre-election, now he has won there is only downside by delaying the inevitable,” he added. “So I expect Sweden to get NATO membership at the NATO summit next month.”



Harris agrees. “He’s already achieved his objective,” he said of Erdogan. “So is Sweden going to get into NATO? I would put money on that, guaranteed. Why would he fight that battle anymore? That was an election issue.”



Already, Sweden’s foreign ministry on Monday said the Swedish and Turkish foreign ministers will meet “soon” to discuss Stockholm’s potential accession to NATO, according to Reuters.



CNBC has contacted the Turkish presidency’s office for comment.



<h2 class="wp-block-heading"><a></a>Russia relationship ‘vital’</h2>



Ultimately, Erdogan’s foreign policy decisions will be made with the intent to primarily benefit Turkey, not its Western allies. In the words of former U.S. ambassador to Turkey David Satterfield, Ankara’s relationship with Russia is “vital” — whether positive for NATO or not.



“Turkey has been a critical partner for the NATO alliance and for the broader international coalition opposing Putin’s war in Ukraine &#8230; I think ‘supporting Russia’ is not the term I would use,” Satterfield told CNBC’s Dan Murphy on Friday. “Turkey has a vital relationship with Russia, its relationship that has generated both good and bad for Turkey in the past,” he said.



“We welcome, welcome the dialogue that President Erdogan has with President Putin, when the subject is stabilization, when the subject is the ability to access grain and other products through the Black Sea from Ukraine, that has been extremely useful and extremely important,” the ambassador said.



“And we do not see this as a pivot or an alignment of some kind with Russia. We see it as the conduct of necessary relations with a very important, for good or ill, neighbor of Turkey.”

107099617-16597042182022-08-05t125602z_730858418_rc2cqv9tfc59_rtrmadp_0_ukraine-crisis-turkey-russia

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Turkey president Erdogan clinches historic third term in power

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/104399900-Turkey_flag-820x462.jpg" alt="" class="wp-image-425112" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/104399900-Turkey_flag-820x462.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/104399900-Turkey_flag-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/104399900-Turkey_flag-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/104399900-Turkey_flag-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/104399900-Turkey_flag.jpg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man holding a Turkish flag. Uriel Sinai | Getty Images</figcaption></figure>



The Turkish lira sank to a fresh record low Monday as incumbent Recep Tayyip Erdogan secured his victory in the 2023 presidential election, extending his rule into a third decade in power.



The currency briefly touched 20.0608 against the greenback at around 11 a.m. Monday morning local time, surpassing a low seen last week.



“We have a pretty pessimistic outlook on the Turkish Lira as a result of Erdogan retaining office after the election,” Wells Fargo’s Emerging Markets Economist and FX Strategist Brendan McKenna told CNBC’s “Squawk Box Asia.”



McKenna forecasts that the lira will reach a new record low of 23 against the dollar by end of the second quarter, and then 25 as early as next year. It has lost some 77% of its value against the dollar over the last five years. He expects Turkey’s unorthodox monetary and economic policy frameworks to remain in place going forward.



Turkey’s monetary policy places an emphasis on the pursuit of growth and export competition rather than taming inflation, and Erdogan endorses the unconventional view that raising interest rates increases inflation.



“The current set up is just not sustainable,” said BlueBay Asset Management’s Senior EM Sovereign Strategist Timothy Ash via email.



“With limited FX reserves and massively negative real interest rates the pressure on the lira is heavy,” Ash continued.



<h2 class="wp-block-heading">Read: <a href="https://www.cnbcafrica.com/2023/turkeys-president-erdogan-seals-election-victory-to-enter-third-decade-in-power/">Turkey’s President Erdogan seals election victory to enter third decade in power</a></h2>



Istanbul’s main index, the Turkey ISE National 100 gained roughly 2% in its first hour of trade.



Credit default swaps, which measure the cost of insuring exposure to Turkish debt, also spiked.



Five-year CDS were trading at around 664.18 basis points, marking a 20% climb from the 550 basis point level prior to the run-offs, according to Refinitiv data.



These developments reflect market participants’ belief that orthodox policies, which were promised by the political opposition, were the only way to get the Turkish economy out of a potential crisis, said Selva Demiralp, a professor of economics at Koç University.



Meanwhile, MarketVector’s CEO Steven Schoenfeld wrote in an e-mail. “If the Lira continues to plunge and inflation surges again due to the policy of inappropriately-low interest rates, we could see a repeat of the ‘flight to safety’ allocation to Turkish equities by local investors which moved the market sharply higher in 2022.”



<h2 class="wp-block-heading" id="h-bleak-economic-outlook-ahead"><a></a>‘Bleak economic outlook’ ahead</h2>



“It’s a very bleak economic and markets outlook for Turkey,” Wells Fargo’s McKenna added.



He noted that the “one silver lining” in the whole scenario could be the Turkish central bank’s ability to secure currency reserve swap lines with countries in the Middle East and China.



“If they can continue to draw on those lines and possibly extend and enhance those reserve currency lines, maybe there’s some support in the central bank FX intervention,” he added.

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Turkey’s lira sinks to fresh record low after Erdogan re-election

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="534" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-820x534.jpeg" alt="" class="wp-image-425108" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-820x534.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-300x195.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-138x90.jpeg 138w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-768x500.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-1536x1000.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Turkey’s President and leader of the Justice and Development (AK) Party Recep Tayyip Erdogan delivers a speech during his partys group meeting at the Turkish Grand National Assembly (TGNA) in Ankara, on May 18, 2022. Adem Altan | AFP | Getty Images</figcaption></figure>



Turkey’s Election Board on Sunday confirmed that Recep Tayyip Erdogan has won Turkey’s 2023 presidential election, extending his rule into its third decade in power after facing the tightest race of his career.



Erdogan won Turkey’s presidency in a runoff election with 52.14% of the votes, the High Election Board head Ahmet Yener said, making the results official.



With 99.43% of ballot boxes opened, Erdogan’s rival Kilicdaroglu received 47.86% of the votes, Yener said. With a gap of more than 2 million votes between candidates, the rest of the uncounted votes will not change the result, he added.



Earlier Sunday, Turkish public broadcaster TRT had called the presidential election for incumbent Erdogan.



Analysts saw the 69-year-old Erdogan’s victory as all but in the bag after the first vote on May 14, which saw him come out five percentage points ahead of his rival, in a giant blow to the opposition.



Kilicdaroglu and his party CHP had pledged change, economic improvement, the salvaging of democratic norms and closer ties with the West — something many expected to take them to victory, especially as years of Erdogan’s economic policies helped create a cost-of-living crisis in Turkey. But in the end, it wasn’t enough.



The AK Party leader’s popularity remains alive and well, even despite public anger at a slow government response following a series of devastating earthquakes in February that killed more than 50,000 people.



Many in Turkey — and the Muslim world more widely — see Erdogan as a protector of faithful Muslims who elevates Turkey globally and pushes back against the West, despite being a longtime Western ally.



By contrast Kilicdaroglu’s party, the CHP, strives for the fiercely secular model of leadership first established by Mustafa Kemal Ataturk, founder of the modern Turkish state. It’s known for being historically more hostile to practicing Muslims, who form an enormous part of the Turkish electorate, although the CHP under Kilicdaroglu has softened its stance and was even joined by former Islamist party members.



<h2 class="wp-block-heading" id="h-big-decisions-ahead"><a></a>Big decisions ahead</h2>



Erdogan has no shortage of work ahead of him — and his decisions will continue to have impacts far beyond Turkey’s borders. The country of 85 million people boasts NATO’s second-largest military, houses 50 American nuclear warheads, hosts 4 million refugees and has taken up a key role in Russia-Ukraine mediation. Western allies will also now be waiting to see whether Erdogan finally agrees to accept Sweden’s application to join NATO.



Erdogan served as Turkey’s prime minister from 2003 to 2014 and president from 2014 onward. He came to prominence as mayor of Istanbul in the 1990s, and was celebrated in the first decade of the new millennium for transforming Turkey’s economy into an emerging market powerhouse. 



Recent years, however, have been far less rosy for the religiously conservative leader, whose own economic policies have contributed to inflation surpassing 80% in 2022 and Turkey’s currency, the <a href="https://www.cnbc.com/quotes/TRY=/">lira</a>, losing some 77% of its value against the dollar over the last five years.



International and domestic voices alike also sound the alarm that Turkey’s democracy under Erdogan is looking less democratic by the day.



The frequent arrests of journalists, forced closures of many independent media outlets and heavy crackdowns on past protest movements — as well as a 2017 constitutional referendum that vastly expanded Erdogan’s presidential powers — signal what many say is a slide toward autocracy.&nbsp;



The Turkish president rejects the criticisms. But with a fresh mandate to lead and previous reforms consolidating presidential power, very little stands in the way of a stronger Erdogan than ever before.



—&nbsp;Reuters contributed to this report.

107063093-1652876994961-gettyimages-1240741318-AFP_32AD3JZ

Turkey’s President Erdogan seals election victory to enter third decade in power

A ‘Big Short’ investor sees financial disaster brewing in housing markets — again

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107245391-1684857280396-gettyimages-1257503956-US_DEBT_LIMIT-820x462.jpeg" alt="" class="wp-image-425102" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107245391-1684857280396-gettyimages-1257503956-US_DEBT_LIMIT-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107245391-1684857280396-gettyimages-1257503956-US_DEBT_LIMIT-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107245391-1684857280396-gettyimages-1257503956-US_DEBT_LIMIT-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107245391-1684857280396-gettyimages-1257503956-US_DEBT_LIMIT-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/05/107245391-1684857280396-gettyimages-1257503956-US_DEBT_LIMIT.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The US Capitol building in Washington, DC, US, on Tuesday, May 23, 2023. Debt-limit negotiators will meet this morning in Washington as President Joe Biden and House Speaker Kevin McCarthy remained without an agreement to avert a catastrophic US default with time running short. Nathan Howard | Bloomberg | Getty Images</figcaption></figure>



With days to spare before a potential first-ever government default, President Joe Biden and House Speaker Kevin McCarthy reached final agreement Sunday on a deal to raise the nation’s debt ceiling and worked to ensure enough Republican and Democratic votes to pass the measure in the coming week.



The Democratic president and Republican speaker spoke with each other Sunday evening as negotiators rushed to draft the bill text so lawmakers can review compromises that neither the hard-right or left flank is likely to support. Instead, the leaders are working to gather backing from the political middle as Congress hurries toward votes before a June 5 deadline to avert a damaging federal default.



“Good news,” Biden declared Sunday evening at the White House.



“The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history,” he said. “Takes the threat of a catastrophic default off the table.”



The president urged both parties in Congress to come together for swift passage. “The speaker and I made clear from the start that the only way forward was a bipartisan agreement,” he said.



The compromise announced late Saturday includes spending cuts but risks angering some lawmakers as they take a closer look at the concessions. Biden told reporters at the White House upon his return from Delaware that he was confident the plan will make it to his desk.



McCarthy, too, was confident in remarks at the Capitol: “At the end of the day, people can look together to be able to pass this.”



The days ahead will determine whether Washington is again able to narrowly avoid a default on U.S. debt, as it has done many times before, or whether the global economy enters a potential crisis.



In the United States, a default could cause financial markets to freeze up and spark an international financial crisis. Analysts say millions of jobs would vanish, borrowing and unemployment rates would jump, and a stock-market plunge could erase trillions of dollars in household wealth. It would all but shatter the $24 trillion market for Treasury debt.



Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due soon as the world watches American leadership at stake.



McCarthy and his negotiators portrayed the deal as delivering for Republicans though it fell well short of the sweeping spending cuts they sought. Top White House officials were briefing Democratic lawmakers and phoning some directly to try to shore up support.



As Sunday dragged on, negotiators labored to write the bill text and lawmakers raised questions.



McCarthy told reporters at the Capitol on Sunday that the agreement “doesn’t get everything everybody wanted,” but that was to be expected in a divided government. Privately, he told lawmakers on a conference call that Democrats “got nothing” they wanted.



A White House statement from the president, issued after Biden and McCarthy spoke by phone Saturday evening and an agreement in principle followed, said the deal “prevents what could have been a catastrophic default.”



Support from both parties will be needed to win congressional approval before a projected June 5 government default on U.S. debts. Lawmakers are not expected to return to work from the Memorial Day weekend before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.



Negotiators agreed to some Republican demands for increased work requirements for recipients of food stamps that House Democrats had called a nonstarter.



With the outlines of an agreement in place, the legislative package could be drafted and shared with lawmakers in time for House votes as soon as Wednesday, and later in the coming week in the Senate.



Central to the compromise is a two-year budget deal that would essentially hold spending flat for 2024, while boosting it for defense and veterans, and capping increases at 1% for 2025. That’s alongside raising the debt limit for two years, pushing the volatile political issue past the next presidential election.



Driving hard to impose tougher work requirements on government aid recipients, Republicans achieved some of what they wanted. It ensures people ages 49 to 54 with food stamp aid would have to meet work requirements if they are able-bodied and without dependents. Biden was able to secure waivers for veterans and homeless people.



The deal puts in place changes in the landmark National Environmental Policy Act designating “a single lead agency” to develop environmental reviews, in hopes of streamlining the process.



It halts some funds to hire new Internal Revenue Service agents as Republicans demanded, and rescinds some $30 billion for coronavirus relief, keeping $5 billion for developing the next generation of COVID-19 vaccines.



The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time. Lifting the nation’s debt limit, now at $31 trillion, allows more borrowing to pay bills already insurred.



McCarthy commands only a slim Republican majority in the House, where hard-right conservatives may resist any deal as insufficient as they try to slash spending. By compromising with Democrats, he risks losing support from his own members, setting up a career-challenging moment for the new speaker.



“I think you’re going to get a majority of Republicans voting for this bill,” McCarthy said on “Fox News Sunday,” adding that because Biden backed it, “I think there’s going to be a lot of Democrats that will vote for it, too.”



House Democratic leader Hakeem Jeffries of New York said on CBS’ “Face the Nation” that he expected there will be Democratic support but he declined to provide a number. Asked whether he could guarantee there would not be a default, he said, “Yes.”



A 100-strong group of moderates in the New Democratic Coalition gave a crucial nod of support on Sunday, saying in a statement it was confident that Biden and his team “delivered a viable, bipartisan solution to end this crisis” and were working to ensure the agreement would receive support from both parties.



The coalition could provide enough support for McCarthy to make up for members in the right flank of his party who have expressed opposition before the bill’s wording was even released.



It also takes pressure off Biden, facing criticism from progressives for giving into what they call hostage-taking by Republicans.



Democratic Rep. Pramila Jayapal of Washington state, who leads the Congressional Progressive Caucus, told CBS that the White House and Jeffries should worry about whether caucus members will support the agreement.

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