(AFP) - Turkish President Recep Tayyip Erdogan appealed for national unity Monday after winning a historic runoff election that extended two decades of his transformative but divisive rule until 2028.

The 69-year-old overcame Turkey's worst economic crisis in a generation and the most powerful opposition alliance to ever face his Islamic-rooted party on his way to his toughest election win.

Streets erupted in car-honking jubilation and tributes poured in from across the world as Turkey's most important leader in modern history led a sea of supporters in celebratory song outside his presidential palace in Ankara.

"We should come together in unity and solidarity," Erdogan told the chanting and flag-waving crowd.

"We call for this with all our heart."

Near-complete results showed Erdogan beating secular opposition challenger Kemal Kilicdaroglu by four percentage points.

"I look forward to continuing to work together as NATO Allies on bilateral issues and shared global challenges," US President Joe Biden tweeted as Erdogan spoke.

UN chief Antonio Guterres said through a spokesman that he "looks forward to further strengthening the cooperation between Turkiye and the United Nations", using an alternate spelling for Turkey.

Russia's Vladimir Putin said the outcome showed the support for Erdogan's "efforts to strengthen state sovereignty and pursue an independent foreign policy".

Ukraine's Volodymyr Zelensky said he wanted to keep working with Erdogan "for the security and stability of Europe".

Leaders across Europe and the Arab world also sent their congratulations -- as did former US president Donald Trump.

Traffic on Istanbul's iconic Taksim Square ground to a halt and huge crowds of singing and flag-waving supporters gathered across Turkey.

"Our people chose the right man," 17-year-old Nisa Sivaslioglu said in the Turkish capital.

"I expect Erdogan to add more to the good things he has already done for our country."

- Longest-serving leader -

Turkey's longest-serving leader was tested like never before in what was widely seen as the country's most consequential election in its 100-year history as a post-Ottoman republic.

Kilicdaroglu pushed Erdogan into Turkey's first runoff on May 14 and narrowed the margin further in the second round.

Opposition supporters viewed it as a do-or-die chance to save Turkey from being turned into an autocracy by a man whose consolidation of power rivals that of Ottoman sultans.

Kilicdaroglu's brief concession statement expressed "real sadness about the big difficulties awaiting the country" with Erdogan.

The opposition leader had re-emerged a transformed man after the first round.

The 74-year-old former civil servant's message of social unity and freedoms gave way to desk-thumping speeches about the need to immediately expel migrants and fight terrorism.

His right-wing turn was targeted at nationalists who emerged as the big winners of the parallel parliamentary elections.

Analysts doubted Kilicdaroglu's gamble would work.

His informal alliance with a pro-Kurdish party, which Erdogan portrays as the political wing of banned militants, left him exposed to charges of working with "terrorists".

And Kilicdaroglu's courtship of Turkey's hard right was hampered by the endorsement Erdogan received from an ultra-nationalist who finished third two weeks ago.

"Erdogan played the nationalist card quite skilfully," Chatham House associate fellow Galip Dalay told AFP.

"The opposition could not come out with an alternative agenda item that could overshadow (Erdogan's) narrative, despite the fact that Turkey is experiencing a very bad economic situation."

- Champion of poor -

Erdogan is lionised by poorer and more rural swathes of Turkey's fractured society because of his promotion of religious freedoms and modernisation of once-dilapidated cities in the Anatolian heartland.

But he has caused growing consternation across the Western world because of his crackdowns on dissent and pursuit of a muscular foreign policy.

He launched military incursions into Syria that infuriated European powers and put Turkish soldiers on the opposite side of Kurdish forces supported by the United States.

His personal relationship with Putin has also survived the Kremlin's war on Ukraine.

Turkey's troubled economy is benefiting from a crucial deferment of payment on Russian energy imports that helped Erdogan spend lavishly on campaign pledges this year.

Erdogan also delayed Finland's membership of NATO and is still refusing to let Sweden join the US-led defence bloc.

- 'Day of reckoning' -

Turkey's unravelling economy will pose the most immediate test for Erdogan.

He went through a series of central bankers to find one who would enact his wish to slash interest rates at all costs in 2021.

Turkey's currency soon entered freefall and the annual inflation rate touched 85 percent last year.

Erdogan has promised to continue these policies and rejected analysts' predictions of economic peril.

Turkey burned through tens of billions of dollars trying to support the lira from politically sensitive falls ahead of the vote.

Many analysts say Turkey must now hike interest rates or abandon its attempts to support the lira.

"The day of reckoning for Turkey's economy and financial markets may now just be around the corner," analysts at Capital Economics warned.

© Agence France-Presse