President Recep Tayyip Erdogan is set to be sworn in on Saturday as head of state after winning a historic runoff election to extend his two-decade rule for another five years as Turkey's economic woes worsen.

The inauguration in parliament will be followed by a lavish ceremony at his palace in the capital Ankara attended by dozens of world leaders.

Turkey's transformative but divisive leader won the May 28 runoff against a powerful opposition coalition, and despite an economic crisis and severe criticism following a devastating February earthquake that killed more than 50,000 people.

Erdogan won 52.18 percent of the vote while his secular rival Kemal Kilicdaroglu 47.82 percent, official results show.

Turkey's longest-serving leader faces immediate and major challenges in his third term driven by a decelerating economy and foreign policy tensions with the West.