Turkish President Recep Tayyip Erdogan appointed loyalist Binali Yildirim as the country's new prime minister on Sunday, just hours after the former transport minister was confirmed leader of the ruling Justice and Development Party (AKP).

Yildirim, a staunch conservative, was the AKP's sole nominee to replace Ahmet Davutoglu at the helm of the party and the cabinet following a special congress held in Ankara.

Davutoglu formally submitted his resignation to Erdogan just as the congress was ending, saying in his farewell address that he was in favour of party unity. He served as prime minister since 2014, taking the AKP to an election victory last year.

Erdogan supporters in the Islamic-rooted AKP had recently accused Davutoglu of having divergent views from the president and moved to push him out. Erdogan is widely believed to have had a hand in picking the new party leader.

The AKP, which has formed every government since 2002, says there are no "gaps" between 60-year-old Yildirim and Erdogan.

The party's top brass insists Erdogan remains their leader, even though he resigned as party chief in 2014 when he was elected head of state. The president is meant to be non-partisan under the Turkish constitution.

Erdogan wants to change Turkey's constitution to empower the presidency and has been taking steps to consolidate his grip on power, including recent crackdowns on opposition media. Critics warn that a stronger presidency would weaken parliament and caution that the judiciary already appears to have been affected by purges and politicization.

Last week, the AKP-dominated parliament voted to remove the immunity of 138 lawmakers - a move that was seen as targeting the pro-Kurdish members.

European politicians, including the office of German Chancellor Angela Merkel, have expressed concern. Merkel is due to raise the matter when she meets Erdogan in Turkey on Monday on the sidelines of a United Nations humanitarian summit.

Yildirim was named the sole nominee for the post of prime minister at a special executive committee meeting of the AKP last week. He was elected at the congress with almost 100 per cent of the votes.

He takes hold of the reins during a turbulent time for Turkey, with security forces at war with the Kurdistan Workers' Party (PKK) in the mostly Kurdish south-east and Islamic State militants controlling territory just over the Turkish-Syrian border.

Despite recent political instability, Turkey's economy has shown some resilience amid pressure on the currency and concerns over inflation.

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