East German economy still trails West 36 years after reunification
03.10.2026, DPA
More than three decades after German reunification, the economy in the country's east continues to lag behind the west, with the gap showing little sign of narrowing in recent years, a leading think tank said.
The five eastern German states reached just under 79% of western Germany's economic level in 2025, according to an analysis released by the German Economic Institute (IW) on Saturday, German Unity Day.
The October 3 public holiday marks the reunification of East and West Germany 36 years ago, in 1990.
The IW's figure is based on an index designed to track eastern Germany's economic convergence with the west. It takes into account economic output per capita and productivity as well as investment, research and development, employment, unemployment and self-employment.
The east has made substantial progress since 1991, when the index stood at 51% of the western level. But convergence has largely stalled over the past five years, with the figure fluctuating between 78% and 79% since 2020 and yet to cross the 80% threshold.
Researchers identified particularly large shortcomings in research and development. The number of research and development personnel in the east was equivalent to just over 46% of the western level. While universities and public research institutes perform relatively well, the east lacks researchers in the private sector, partly because it has few large companies.
Investment has also stagnated, while labour force participation relative to the overall population has lost ground.
Demographic change could further hamper convergence. Without immigration, the Cologne-based IW forecasts that eastern Germany's population will shrink by more than a fifth by 2045, making the region particularly dependent on skilled workers from abroad.
The institute said the surge in support for the far right in recent eastern state elections had raised questions about the region's openness to immigration, further clouding the economic outlook.
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