Greek election – Positive news for Europe in the short term

Torbjörn Isaksson, Chief Analyst

The New Democracy conservative party, which wants Greece to remain in the eurozone, won the Greek parliamentary elections on Sunday 17 June.

“This is a favourable outcome for Europe, but the situation is still very uncertain,” says Torbjörn Isaksson, Chief Analyst at Nordea.

How does the election outcome affect speculation about Greece potentially leaving the eurozone?

“The risk of Greece abandoning the euro is lower now than it was ahead of the election. After the election, New Democracy stated that Greece would work to stay in the eurozone. However, the challenges facing the Greek economy remain in place, and there is still a risk that the country will opt out of the common currency in the longer term.”

What are the implications of the election outcome for the Swedish economy?

“Sweden’s economy is strong, but is nevertheless affected by turbulence on financial markets. For instance, we have extensive foreign trade that is affected by the unease. The fact that Greece voted pro-Europe comes as a relief to global markets, which has a positive effect on the Swedish economy. The situation is still unclear and at the moment we are waiting to see which parties will form the government, and how strong the government will be.”
How are foreign exchange rates affected by unease on the financial markets?

“When storms strike the global economy, the Swedish krona often weakens. The dollar has strengthened in the last six months and we believe it will continue to strengthen in the near future.”

Torbjörn Isaksson, Chief Analyst