This weekend's Bavarian elections in Germany – in which the "alpha male" governor of the state will seek re-election – will be closely watched ahead of the country's general elections, and could signify much about the future of German and euro zone politics, according to analysts.
The current Bavarian governor, Horst Seehofer, is expected to win the state vote this Sunday, which is seen as an "important signpost" for the outcome of the national election on September 22, yielding insights into national trends, euro zone analysts at Citi Group said on Friday.
Seehofer leads the Christian Social Union (CSU) party, which makes up half of Merkel's conservative coalition, and was labeled "one of the last alpha males left in Angela Merkel's conservative camp" by German magazine Spiegel International on Friday. His penchant for Bavarian traditions – such as lederhosen, beer halls and dirndl (a revealing dress) – has appealed to voters on the campaign trail, and helped earn him the "alpha male" title.
But although the CSU looks set to win an absolute majority in Bavaria, the coalition's junior party, the Free Democrats (FDP), is not expected to fare so well. According to a poll by broadcaster N24 on Thursday evening, the FDP only has 4 percent support – below the 5 percent threshold needed for parliamentary representation.
This raises the possibility of a so-called "Grand Coalition" of the CSU and its main opposition party, the SPD. The latest general election poll data gives Merkel's Christian Democratic Union (CDU) coalition with the CSU 38.7 percent of the vote, the SPD 24.9 percent and the FDP 6.5 percent.
Alex Travelli, Hong Kong Bureau Chief at The Economist, said that although the re-election of the current coalition would be the best outcome in terms of stability, a Grand Coalition could provide Merkel with more political freedom to introduce reforms in Germany.
(Read more: German elections are a 'close call': Merkel)
"This campaign she (Merkel) is running - presenting herself as a trusted pair of hands for Germany - suggests that she might be preparing herself for a new coalition that would allow her to do more of these reforming things like reforming structures at home an easing austerity measures abroad that so many of us think have been a failure," Travelli told CNBC on Friday.
"A Grand Coalition [wouldn't] be a disaster," he added. "A Grand Coalition with her as Chancellor would really be a fine thing and allow her to show the leadership she's capable of."
Citi's euro zone analysts, led by Ebrahim Rahbari, agreed. They warned that a win for Merkel's current coalition would mean "four more years of cautious German euro zone policy," with popular and institutional constraints capping the potential for any German government to substantially increase its euro zone support "without acute stress."
Citi said that the end result be a Grand Coalition - made up of Merkel's CDU and the SPD - this result would actually be "slightly more market positive."
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