Sweden was still in an unprecedented political crisis this week after Prime Minister Stefan Löfven’s government fell after losing a vote of no confidence in parliament.

With the impact of the Covid-19 pandemic having already hit the Swedish economy hard, there are fears that the political crisis is now hampering the country’s recovery, just as it has started to return to a more normal situation thanks to the downturn infection rates and vaccine deployment.

However, economists believe that political wrangling and instability should not have too much of a negative impact on the Swedish economy.

“Our assessment is that the current political uncertainty will not have significant consequences for the economy or interest rates,” Michael Grahn, chief economist at Danske Bank, told the TT news agency.

“On the other hand, the crown can be affected in the short term,” he warned.

The country is still waiting for Löfven to take its next step, which could lead to early elections or even tougher negotiations to form a new government, but Susanne Spector, chief analyst at Nordea Bank, says the country is stable enough to avoid any major economic fallout.

“We have a strong economy and a parliament that can still make decisions,” she told The Local. “The economic effect will be small or nonexistent.”

However, she warned that if the political crisis in Sweden continued and prevented a government from functioning, it would eventually wreak havoc.

“We could end up with weaker governments that are not able to make the necessary changes,” she said.

Even if an early election is called, Spector does not believe it will have a significant impact on the economy despite the estimated cost of 400 million crowns to organize the vote nationwide.

“It’s a small amount overall,” the analyst said.

Spector also believes the Swedish economy will remain stable regardless of which parties make up the next Swedish government.

She adds that the improvement in the Covid-19 situation in Sweden means there is more reason to be optimistic about the economy than to be optimistic. Spector says there is a strong economic recovery, with most adults soon to be vaccinated (although Sweden pushed back its vaccine target on Thursday), boosting consumption.

“Even though we have been repeatedly wrong about the virus, the economic forecast has always been revised upwards time and time again,” Spector said, adding that Sweden had “good conditions regardless of the virus situation” .

Anders Bergvall, senior economist at Handelsbanken agrees: “Our public finances are strong,” he told The Local, adding “mmore and more people are receiving the full dose of the vaccine. The situation looks good and we continue to open up.

What impact will a weakening crown have?

The sudden political upheaval in Sweden initially caused the value of the krone to fall against the euro, US dollar and British pound before the Swedish currency recovered.

Spector says the Swedish krona is expected to weaken this year due to the strengthening of the US dollar over the next few months.

But what does this mean in general?

Sweden is an export-oriented economy, and a weak krone can make Swedish companies more competitive, as their products become cheaper to buy than those from countries with the euro. However, for companies that depend on imports, the costs are higher, which also affects many export-oriented companies.

But when it comes to individuals, those with a salary or pension paid in euros or another relatively strong currency will get more for their money when they spend in Sweden. Anyone considering a move or an investment in Sweden, such as buying a house, using savings from outside Sweden is therefore in a strong position.

Many savers in Sweden put their money in international funds and stocks, which means that the returns are lower when the krone is relatively low.

And a low krona is not good news for those who are paid in Swedish currency, intend to travel abroad, or send money abroad (for example, to members of their family in their country of origin).

A strong crown can also be bad news for some.

Anyone considering relocating or investing in Sweden, such as buying a house, using savings from outside Sweden is in a weaker position when the krone strengthens against other currencies.

And a strong crown means travel to Sweden from abroad will become more expensive than usual – although the impact of global travel restrictions, limited flights and other consequences of the pandemic will be greater. Currency trading is quite unlikely to be the top priority for many people when deciding if and where to travel in the near future.