Top economists play down German elections

The Social Democratic Party will be the largest party after Sunday’s elections in the German Bundestag, with 25.7 percent of the vote. That is only 1.6 percentage points more than the CDU/CSU Christian Democrats.

The support of the liberal FDP or the Green Party is expected to be crucial to who can form a government and get the chancellor position. According to Robert Bergqvist, chief economist at SEB, it plays a secondary role in economic policy.

– I have great respect for the German elections, but there are a lot of other question marks that will affect the Swedish economy more than the German elections. Now we see the features of the global economic crisis, he says.

Germany in the suburbs

Robert Bergqvist mentions the oil crisis in the UK and China, where the economic problems of real estate firm Evegrande could affect both the Chinese economy and the entire global economy, as well as the ongoing inflation discussion that could stress central banks to raise interest rates.

What is happening in Germany is something on the edge of my radar when I try to understand what is affecting the Swedish economy. German politics doesn’t usually offer any big surprises, so there is financial predictability, he says.

Even if the German economy – and thus the Swedish economy – is not expected to be affected more greatly by any party in power in Germany, the choice is not slim. Bergqvist says the political dynamics in the EU and Germany’s relations with other countries could develop in different directions depending on whether Schulz of the SPD or Laschet of the CDU eventually gain power.

Strong government finances

Nor does it stress the importance of a long-term government – and perhaps months without a new one – on Bergqvist either.

The danger is that we will get a political vacuum that I do not think will affect the German economy and therefore not the Swedish economy. More often than not, economies can develop without a new government, says Robert Bergqvist.

It also creates the security that Europe’s largest economy has the resources.

German public finances are very strong. SEB’s chief economist says they have some wiggle room to deal with problems should they arise.