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Campaign posters of the 13th Presidential candidate and Republican People's Party (CHP) Chairman Kemal Kilidaroglu (L) and the President of the Republic of Turkey and Justice Development Party (AKP) President Recep Tayyip Erdogan (R) are seen displayed.

Tunahan Turhan | Sopa Images | Lightrocket | Getty Images

The result of the first round of Turkey's presidential election was a blow to the opposition, who had high hopes of unseating President Recep Tayyip Erdogan after 20 years in power.

Contender Kemal Kilicdaroglu, a soft-spoken, bookish 74-year-old,is running as the candidate for change, vowing economic reform, a reversal of Erdogan's policies that many describe as autocratic, and closer ties with NATO and the West.

Turkish opinion polls released before Sunday's vote indicated a clear lead for Kilicdaroglu. But by Monday, after nearly all votes were counted, 69-year-old Erdogan finished solidly ahead with 49.5% of the vote; Kilicdaroglu had 44.9%. Since neither candidate won more than 50% of the vote, however, the election will go to a runoff on May 28.

Turkey is a country of around 85 million people, sitting at the geographical crossroads of East and West. It boasts NATO's second-largest military, is home to 4 million refugees and plays a pivotal role in geopolitics with its mediation in the Russia-Ukraine war.

The election results show that it's more divided than ever.

They also reveal that despite Turkey's current economic turmoil, tens of millions of Turks still see Erdogan as their only viable leader.

Supporters of Turkish President Recep Tayyip Erdogan celebrate at the AK Party headquarters garden on May 15, 2023 in Ankara, Turkey. President Recep Tayyip Erdogan faced his biggest electoral test as the country voted in the general election.

Burak Kara | Getty Images News | Getty Images

Turkey is facing a cost-of-living crisis, with inflation around 50% and its national currency, the lira, down more than 75% against the dollar in the last five years in large part thanks to Erdogan's steady lowering of interest rates despite soaring inflation and shrinking foreign exchange reserves.

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

Presiding over numerous national accomplishments for the country, he has championed nationalist pride, security, respect for the Islamic faith, and frequently pushed back against the West, winning the loyal support of many Turks as well as non-Turkish people around the Muslim world.

Going head-to-head with Erdogan, Kilicdaroglu pledged a return to core democratic values and economic orthodoxy after his rival's heavy influence over the Turkish central bank sent foreign investors running.

He and his supporters accuse Erdogan of pulling the country toward authoritarianism, as Erdogan's reforms over the years concentrated his presidential power, and his government oversaw heavy crackdowns on protest movements and the forced closure of many independent media outlets.

Despite all this, Kilicdaroglu, and the alliance of six parties he represents, fell short. People are pointing to a variety of reasons: his shortcomings as a candidate, the inaccuracy of pollsters, Erdogan's government blocking more viable opposition, and the enduring popularity of Erdogan himself.

Kemal Kilicdaroglu, the 74-year-old leader of the center-left, pro-secular Republican People's Party, or CHP, delivers a press conference in Ankara on May 15, 2023.

Bulent Kilic | Afp | Getty Images

Kilicdaroglu is a "subpar candidate," Mike Harris, founder of advisory firm Cribstone Strategic Macro, told CNBC on Monday, "but he still should have been able to win this thing, considering how big Erdogan's negatives are, and what a disaster things are for the economy."

Harris said that once Kilicdaroglu was selected as a candidate, and "that mistake was made, these are the cards we have to deal with. And it looks like the result is it's going to be a close one."

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.

People who criticize the opposition's choice of candidate point to the fact that the CHP has repeatedly lost elections to Erdogan's powerful conservative and religious AK Party since Kilicdaroglu became its leader in 2010. The CHP's six-party platform is also an alliance of dramatically diverse parties, prompting concerns over its risk of fracturing once in power.

A representative for Kemal Kilicdaroglu's campaign wasn't immediately available for comment when contacted by CNBC.

There was hope in recent years that the popular mayor of Istanbul, Ekrem Imamoglu, a CHP member and vocal critic of Erdogan, could be Turkey's next president. But in late 2022, Imamoglu was unexpectedly sentenced to nearly three years in prison and barred from politics for what a court described as insulting the judges of the country's Supreme Election Council.

Imamoglu and his supporters say the charges are political, directed by Erdogan and his party to sabotage Imamoglu's political ambitions, something the AK Party denies.

For many observers, the story is emblematic of Erdogan's apparently unshakeable grip on power.

In 2018, Selim Sazak, an advisor to one of Turkey's smaller opposition parties, wrote: "Taking on Erdogan was always an honorable but doomed effort. The opposition groups were up against insurmountable odds. Erdogan used every advantage of incumbency; he had all the state's resources at his disposal and the media was almost entirely under his control."

Many observers now see the opposition's chances as bleak.

"I don't think that the opposition is going to gain any ground on the 28th of May," Arda Tunca, a columnist at Turkish news site PolitikYol, told CNBC.

Erdogan's AK Party also won a majority in Turkey's parliamentary election Sunday, meaning "Erdogan has the advantage of convincing the electorate that if the opposition leader is the winner, he's going to be a lame-duck president because the parliament is formed by the incumbent government," Tunca said. "So the power is on the government side in the parliament."

Still, Kilicdaroglu's 44.9% of the vote is notable as the highest any opposition candidate ever received, said Orcun Selcuk, an assistant professor of political science at Luther College in Iowa, on Twitter. "The opposition clearly did not meet the expectations but it would be a misjudgment to say that opposition coordination failed. There are important gains but they are not sufficient."

Kilicdaroglu promised an overhaul of economic policies, something that many investors had hoped for.

That hope turned to worry after Sunday's result, however, with a 6% fall in the Borsa Istanbul's benchmark BIST index, a nearly 10% dip in banking stocks and the lira's biggest percentage drop against the dollar in six months.

"Unfortunately it looks like [what] up to 49% of Turks have voted for is an economic crisis. ... The next two weeks, we could see the currency collapse," Harris said.

The monetary tools Erdogan's administration has been using to give the economy a semblance of stability are unsustainable, economists warned, and after the election will have to stop likely leading to severe volatility.

"Erdogan's significant outperformance in round one represents one of the worst case scenarios for Turkish assets and the lira," said Brendan McKenna, an emerging markets economist at Wells Fargo.

He expects the lira, currently trading at 19.75 to the dollar, to have a "significant selloff" in the near future and forecasts it falling to 23 to the greenback by the end of June.

Beata Javorcik, chief economist at the European Bank for Reconstruction and Development, told CNBC that Erdogan had "prioritized growth over macroeconomic stability."

"There is a limit to how long you can pretend the basic laws of economics do not apply," she said. "So there will be some hard choices that the government in Turkey will have to make, regardless of who leads this government."

An unexpected kingmaker has also emerged in the form of Sinan Ogan, an ultra-nationalist third-party candidate who outperformed expectations with more than 5% of the vote. Who his voters support in the second round could determine the final result and they're unlikely to throw their support behind Kilicdaroglu.

Kilicdaroglu, meanwhile, has reshuffled his campaign team, reportedly firing some staff and stressing that the election's fate is not yet sealed. "I'm here till the end," he said in one video, slamming his hand on a table. But critics point out that he still has not spoken publicly to his supporters, and say he lacks a clear runoff strategy.

"Kilicdaroglu's non-appearance on Monday and the subdued mood from his camp have dealt a heavy blow to his base," Ragip Soylu, Turkey bureau chief for Middle East Eye, wrote on Tuesday.

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Erdogan's election lead leaves Turkey's opposition reeling and an economy on the brink - CNBC