BERLIN—A politician who built his popularity on his response to Covid-19 and styled himself as German Chancellor Angela Merkel’s true heir is now best placed to succeed her as leader of Europe’s largest economy after scoring a narrow win in Sunday’s election.

Olaf Scholz’s Social Democratic Party won a small majority over Ms. Merkel’s conservatives. But with just a quarter of the votes, he is also the first leading politician in the country’s postwar history to need support for three parties to build a stable majority in parliament.

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