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In 15 years of Recep Tayyip Erdogan governments, Turkish markets have mostly relished the last month leading up to elections. This time, its different.

Ever since 2002, when the Turkish presidents Ak Party first came to power, at least one asset class -- be it the lira or stocks -- has rallied in the run-up to impending votes. In the month leading up to snap elections on June 24, the lira has depreciated 3.6 percent against the dollar, despite the central banks emergency efforts to help stem the currencys decline.

The Borsa Istanbul 100 Index has dropped about 7 percent even as valuations tumbled to nine-year lows, and the yield on 10-year bonds has surged more than 160 basis points.

Turkish markets show their worst pre-election performances of Ak Party era

Irrespective of what the political outcome is this weekend, the economic outlook in Turkey cannot be favorable in any scenario, Julian Rimmer, a London-based trader at Investec Bank Plc, said by email. Turkey is faced with a Hobsons Choice of either the continuation of destructively unsustainable Erdonomics or a new government and/or president obliged to take some bitter corrective medicine with much lower growth.

Emerging market inflows and accommodative monetary policies globally, which gave Turkey a free pass throughout the last cycle, are no longer operative, Rimmer said.

Part of the reason Turkish assets typically gained ahead of elections in the past can be attributed to pre-ballot polls showing the Ak poised for landslide victories, with the party and Erdogan depicted as bastions of stability for the economy and markets.

On this occasion, investors would like to see progress on economic reforms before making strategic investment decisions, said Piotr Matys, an emerging market strategist at Rabobank in London. The role of the central bank after the vote will be absolutely crucial.

A little over a month before the elections, Erdogan said he intended to tighten his grip on monetary policy, comments that sent the lira into a downward spiral, tumbling to a record-low against the dollar. He doubled down this week by urging his supporters to give him another five-year term in Sundays election so he can lower interest rates.

The ballot takes place amid heightening investor fears of an economic slowdown. While Turkeys economy grew 7.4 percent last year and in the first quarter of this year, the expansion came at the expense of one of the widest current-account deficits among G-20 nations and a double-digit inflation rate.

In May, S&P Global Ratings cut Turkeys credit rating deeper into junk saying there is a risk of a hard landing for Turkeys overheating, credit-fueled economy. In June, Moodys said the nations rating could be cut due to the uncertainty regarding the direction of countrys macroeconomic policy and said recent erosion in investor confidence will continue if not addressed through policy actions following the vote.

Assuming Erdogan is re-elected, hell be governing for at least another five years; so, perhaps during the first half of his presidency, hell have less incentive to keep stimulating the economy as hes been doing for the last two years, Matys said. If thats the case, the economy may rebalance and inflation may fall, which would be an encouraging signal for investors. But there are still massive question marks.

With assistance by Inci Ozbek, and Paul Wallace

(Updates asset prices throughout.)

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