Eastern Germany to lag behind for years to come: study

Twenty-six years after reunification, eastern Germany remains economically anaemic with little prospect of catching up with the rest of the country by 2030, a study published on Wednesday said.

Of the eastern states, only “Saxony and Brandenburg will reach the level of overall average German growth” between 2015 and 2030, wrote Joachim Ragnitz of the Ifo economic think-tank.

The remaining federal states formed from the former territory of the German Democratic Republic (GDR) — Mecklenburg-Western Pomerania, Thuringia, and Saxony-Anhalt — will by contrast reckon with “in parts extremely low growth rates”.

Eastern Germany’s GDP grew by 1.2 percent per year between 2010 and 2015, underperforming the 1.6 percent achieved by western Germany plus Berlin, Ifo calculated. While Brandenburg benefits from its proximity to Berlin and Saxony boasts two attractive large cities in Dresden and Leipzig, the other “new states” face significant challenges.

The former GDR has seen a decadeslong emigration of the young, exacerbating the ageing population problem due to low birth rates that affects all of Germany.

“Exactly the people with a high level of qualifications who could push increased productivity and innovation are lacking,” Ragnitz wrote.

As well as sapping the supply side of the economy with a brain drain, demographic weakness also undermines demand, as fewer people are around to spend in the local economy. (AFP)