ISTANBUL (BLOOMBERG, AFP) - Turkish President Recep Tayyip Erdogan prides himself as a builder and manager of cities. But for the first time since 1994, many of them turned against him on Sunday (March 31).

The capital and cities along the Mediterranean coast slipped from the grasp of Mr Erdogan's nationalist alliance in a municipal election upended by a raging recession and a recent run on the currency.

But it largely stood its ground across much of the country's rural interior even as competing victory declarations and the opposition's claims of manipulation clouded the fate of the race in Istanbul, Turkey's largest city and commercial hub.

Mr Erdogan said his ruling Justice and Development Party (AKP) would "correct its shortcomings" after it appeared set to lose power in the capital Ankara and faced a dead heat over Istanbul in local elections.

"If there are any shortcomings, it is our duty to correct them," he told thousands of supporters in Ankara. "Starting tomorrow morning, we will begin our work to identify our shortcomings and make up for them."

The Turkish leader did not directly mention the full election results there or in Istanbul but said that if his party had lost in Istanbul, they would still control the local district councils even if the opposition held the mayor's office.

His candidate for Istanbul, former premier Binali Yildirim, earlier claimed he had won, but his opponent Ekrem Imamoglu said it was premature, with final results still being counted.

The AKP candidate had 48.71 per cent of the votes with the opposition at 48.65 per cent, according to Anadolu state news agency.

Mr Erdogan and the AKP have won every vote since the party first came to power in 2002, but this time, analysts say the party had risked losing Ankara and faced a tough fight in Istanbul as an economic slowdown took hold in Turkey.

The President's first setback at the polls in years shows his ruling AK Party and its nationalist partner are paying the price after the economy dipped into its first recession since the global financial crisis.

Although the result won't affect his formal grip on the executive body, the erosion in support will add urgency to efforts to put the economy back on a growth track and regain the confidence of investors after years of populist quick fixes.

"The opposition gets a morale boost," said Mr Ozgur Unluhisarcikli, head of the German Marshall Fund of the United States office in the Turkish capital. "The governing party is set to go through a tough time due to inflation and recession."

While Mr Erdogan's name wasn't on the ballot, it was his political standing that hung in the balance after a quarter-century reign in Ankara and Istanbul by his Islamist-rooted party and its predecessors.

In the run-up to the vote, the President held more than 100 campaign rallies, sometimes speaking as many as eight times a day. In an interview with the state broadcaster days before the election, he fielded questions as the candidates for mayoral races lined up bleacher-style as his background audience.

The AKP-led alliance had 51.7 per cent of the national vote, with 98.9 per cent of the ballot boxes opened, the state-run Anadolu Agency reported. The opposing camp led by the Republican People's Party, or CHP, had 37.5 per cent, Anadolu reported.

The pro-Kurdish HDP, which is sitting out the races outside its stronghold in Turkey's eastern regions, garnered 4.2 per cent.

The overall share of the votes for Mr Erdogan's alliance didn't change dramatically since last year's presidential vote, as he maintained his hold on the interior of the country, where his nationalist-religious rhetoric appeals to a more conservative base. Mr Erdogan got 52.6 per cent of the vote in June.

'Heavy Price'

The Turkish lira traded down 0.4 per cent against the dollar at 2.50am in Istanbul. The authorities had been preventing foreign banks from accessing lira liquidity in the run-up to the vote, making it virtually impossible for them to short the currency.

Still, it is the second-worst performer in emerging markets this year after Argentina's peso, with a loss of 5 per cent against the dollar.

As the economy slipped into recession and the lira lurched from one crisis to another, the President lashed out at enemies at home and abroad, warning bankers of a "heavy price" to pay after the elections for feeding the currency chaos.

The opposition says shrinking support for Mr Erdogan would mark the beginning of the end of his 16-year rule. The Turkish leader was sworn in with almost untrammelled powers after last year's general election that followed a 2017 constitutional amendment to change Turkey's political framework into an executive presidency from a parliamentary system.

The President's critics say he is running an increasingly authoritarian system, curtailing media freedoms and muzzling political opponents through court cases. Clashes between rivals at some polling stations left at least two people dead on Sunday.

Even before the final figures were announced, Mr Yildirim said he won the race in Istanbul, Turkey's commercial hub, a claim rejected by the opposition, which said it won.

As Mr Yildirim declared victory, the state-run news agency reported a margin of less than 0.1 percentage point between him and rival Imamoglu. That means that out of some 10 million ballots cast in the city, the difference at the time was about 5,000 votes.

Mr Imamoglu said in a later press conference that he won the race by more than 29,000 votes. When Mr Yildirim spoke, the state-run news agency showed 98.8 per cent of votes tallied, and then stopped reporting updated results for Istanbul for several hours after he declared victory.

If early indications hold, at least nine cities may change hands.

In addition to Ankara, Mediterranean tourism hub Antalya, coastal province Adana and port hub Mersin looked headed for opposition control, with candidates allied to the CHP defeating mayors who won in the last municipal elections for one of two parties in Mr Erdogan's alliance.