The market appears to initially interpret the outcome of the German election as positive. The euro strengthens against the dollar and the DAX index opens upwards.
SEB's chief economist Jens Magnusson says that Germany needs a fresh start after a period of both economic and political difficulties. And the hope is that the presumed next Chancellor Friedrich Merz from the conservative CDU will be able to form an effective coalition with the Social Democrats.
The hope is that they will be able to agree more and get a bit more done than the previous traffic light coalition, which had a very hard time agreeing. And even when they agreed, they had a hard time implementing, says Magnusson.
He does, however, raise a warning finger that all of Germany's economic problems are far from over.
Germany has had some economic difficulties. Some have been cyclical while others have been structural, says Jens Magnusson, mentioning among other things the German industry's inability to adapt to a new world with, among other things, tough competition from China.
And those problems do not disappear just because the country gets a new government, he points out.
One can still be cautiously optimistic, but one must be cautious, for there is much that remains.
