Exit polls showed that German Chancellor Angela Merkel and her preferred partner, the Free Democrats (FDP), won Sunday's general election and they are planning a new government for the next four years.

Although the outcome of the election partly fits prediction of local political analysts, it has also brought some upsets. All in all, the election has changed the political landscape in the biggest economy of Europe.

Merkel clinches narrow victory

Merkel's conservative party, the Christian Democrats (CDU/CSU), and the FDP jointly won 48.3 percent of the vote in Sunday's general election. Thus, the two parties secured a clear majority to form a new coalition government, exit poll results showed.

Based on the votes, analysts for state TV channel ZDF television predicted Merkel's party and the FDP would occupy 323 seats, a safe majority out of the 614 seats likely to be filled in the new lower chamber of parliament, the Bundestag.

"Our main objective has been achieved, namely a change of government, " Merkel said when claiming victory before cheering supporters in Berlin.

The victory has thus put an end to the unpopular "grand coalition" between the CDU/CSU and the Social Democrats (SPD) forged four years ago, and the German politics turned a new face overnight.

However, Merkel's victory is far from a landslide one.

A latest exit poll for public TV channel ZDF gave Merkel's CDU/CSU 33.7 percent of votes, which is the worst rate for the conservative bloc since 1949. During the last election in 2005, the CDU/CSU staged poor performance, but it still earned 36 percent of votes.

"It is a narrow victory for Merkel," an analyst told BBC.

As a matter of fact, Merkel should owe her continuation of chancellory to the sensational good performance of her preferred partner, the FDP, which won 14.6 percent of votes, a record high.

"She bent on the opportunity, ... her victory depends on her junior partner," said the observer.

Record defeat for SPD

Merkel's previous coalition ally, the SPD, attained its worst result in the six-decade history of modern Germany with just 23.1 percent of the votes, down 11.2 points.

The SPD's candidate for chancellory Frank-Walter Steinmeier, who is foreign minister in the outgoing government, conceded defeat soon after the exit polls were released.

For one thing, lack of clear demarcation of policies led to the failure.

In a pre-election live TV debate, Steinmeier shunned tit-for-tat confrontation with Merkel, failing to table eye-catching policies.

For the other, the division of the party over the past years has weakened the party.

The Left Party, which took record 12 percent of votes in Sunday's election, has bitten away a considerable share of votes from the SPD.

New political landscape

Sunday's election indicated the change of strength among five major German parties. On the one hand, there was considerable decline of the CDU/CSU and the SPD, two traditional controlling parties in German politics; on the other, there was the rise of the three small parties.

The CDU/CSU got the lowest votes since 1949 although it will stay in power; The SPD saw the worst votes since WWII, an avalanche disaster for the century-old party in the country.

However, the FDP harvested record high votes of nearly 15 percent.

The Left Party, which emerged just two years ago, earned 12 percent of votes, achieving a double-digit percentage of shares for the first time,

The environmentalist Greens, founded in 1980s, got 10.5 percent of votes, remaining to be a balancing strength in German politics.

"A new party system" emerged tonight, said Jan Techau, head of the European Studies Center at the Berlin-based German Council on Foreign Relations (DGAP).

"The proportional electoral system in Germany encourages small parties to grow, and we will see what next," Techau said.

Difficult tasks ahead

Although the black-yellow coalition is at hand, Merkel is facing a tough negotiation with the FDP over how to share the power in the new government.

Techau said FDP chairman Guido Westerwelle, who is widely considered to be foreign minister in the upcoming government, is a "smart, intelligent, quick-minded" politician. In the meantime, he is also an "inconvenient" partner for Merkel.

When addressing supporters in the FDP headquarters after victory, Westerwelle openly demanded to "co-govern" with Merkel's conservative bloc in the new government although his party takes less than half of the CDU/CSU's seats in the parliament.

In the follow-up process, leaders from the CDU/CSU and the FDP, headed by Merkel and Westerwelle, are expected to hold negotiations on the details of forming a center-right government. The negotiations are sure to be a tug of war.

"How much Merkel wants to change (within her government), and how much room left for change remains a question," said Techau.

In terms of policy orientation, the FDP is known to demand tax cuts, be reluctant to bail out companies and oppose generous stimulus packages. If Merkel fails to properly handle their demands within the government, it will sharpen the political divide in Germany.

Meanwhile, Germany, the biggest economy in Europe is still struggling to recover from the global financial crisis and economic downturn, the new coalition government has to explore solutions to secure quick recovery for the world's second biggest exporter.

"Given the dramatic financial crisis, given the rise of unemployment across the country, that's the big question they have to answer," said Techau.