East Germany's economy is at risk of losing touch, according to the Dresden-based ifo Institute for Economic Research. According to the "Competitiveness Report East Germany 2026", it is primarily a lack of private investment and skilled workers that is hampering economic growth in the eastern federal states in the view of the researchers. The gap between eastern Germany and the rest of the country threatens to widen again despite growing prosperity "if politics and business do not take decisive countermeasures now", said deputy branch manager Joachim Ragnitz.
According to the authors of the study, private investment per capita in the east reached around three quarters of the western level between 2019 and 2023. Excluding the areas of housing construction and public infrastructure, private investment only reached two thirds of the level in the West. Demographic change is also creating additional challenges. The number of people in employment in eastern Germany will fall by seven percent by 2035. The decline will be even more pronounced in Thuringia and Saxony-Anhalt, the report continues.
