Volkswagen
Therefore, we should care more about Germany than the United States
Andreas Cervenka
Reporter and economic commentator
This is a commenting text. Analysis and positions are the writer's.
Updated 20.54 | Published 20.38
And for the Swedish economy and Swedish jobs, it is significantly more important.
Donald Trump, Kamala Harris, Tim Walz, JD Vance, Joe Biden. Swedes have an iron grip on American politics and the upcoming election.
How many can name five German politicians? It is likely significantly fewer.
It's actually a bit backwards.
Monday was a dramatic day in Germany. On the one hand, it was clear that the extreme right made strong progress in the state elections in Thuringia and Saxony in eastern Germany.
In Thuringia, the AfD won with a whopping 33 percent of the vote, while the newly started BSW, a populist party that mixes extreme positions on both the right and the left, got 16 percent.
On the same day, it was announced that the car giant Volkswagen, Germany's largest company, is considering closing factories in the country for the first time in its 87-year history.
Car sales are still below pre-pandemic levels and Volkswagen and other European giants have failed to invest in electric cars and face competition from Tesla and the cheap Chinese brands now flooding the market.
Volkswagen has 300,000 employees in Germany. The strong German unions are said to be fighting against the factory closures. But regardless of how the fight ends, the historic announcement from the company is just the latest symptom that the German economy is not doing very well.
After long being a sprinting giant in Europe, with both the largest and fastest growing economy, the country is now moving forward.
Last year, Germany's GDP shrank by 0.3 percent and according to the European Commission's latest forecast, this year's growth will land at a modest 0.1 percent, worst in the entire EU (second worst is Sweden with an expected GDP increase of 0.2 percent).
There are several explanations for the crisis. One is that German industry lived well for a long time on cheap imported Russian gas, another is that the pandemic and geopolitical conflicts have generally hit world trade, a third is that Germany has become dependent on exports to China, which has now turned and become a competitor rather than a customer .
Add an aging population and lagging investment, not least in pension systems, and today's problems have been brewing for a long time.
As in Sweden, a debate has raged in Germany about whether the state should borrow more, with the difference that the German national debt is significantly higher than in Sweden at the outset, more than twice as large as a share of GDP.
All of this is relevant for Sweden. Germany is by far our most important trading partner.
In 2023, Germany was the single largest export market for Sweden, a total of SEK 221 billion worth of goods were shipped, compared to SEK 189 billion to the USA.
For many Swedish companies, German industry is both important customers and suppliers.
If the ground shakes under giants like Volkswagen, it is felt all the way to Sweden.
Germany is also a huge market for several Swedish consumer companies.
The outlook for the German economy is not likely to improve after the election results this weekend.
German companies warn of disaster if the eastern parts of the country throttle immigration, something that is at the top of the wish list of the extremist parties.
Immigration is needed to fill the gap left by the hundreds of thousands of people who will retire in the next few years.
"Without controlled immigration, Thuringia and Saxony could soon turn off the lights," the head of an organization for family businesses told the Financial Times.
But perhaps even more important is what is happening in Germany in a larger perspective
Both AfD and BSW want to put an end to more German support for Ukraine, good news for Russia but less pleasant for countries like Sweden, which may then have to do even more.
The AfD is also openly anti-EU and wants Germany to leave the Union. The party was formed after the euro crisis in 2012, when the EU - led by Germany's then leader Angela Merkel - bailed out heavily indebted countries in southern Europe.
Since Germany has long been the most important putty in the entire euro construction, it can get messy if there is another major crisis.
Indirectly, it has a very large impact on Sweden.
The dangers should not be exaggerated, Germany is still Europe's largest and the world's fourth largest economy and the AfD still has no formal power.
But during the autumn, which is likely to be a lot about the presidential election in the USA, it is worthwhile for Swedes to also keep an eye on Germany.
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