Ifo study: East catches up - but remains structurally behind

East Germany has caught up significantly in terms of economic performance, research and quality of life - but is structurally lagging behind the West. This is shown by the new ifo Fact Monitor East Germany, which was presented at the East German Economic Forum (OWF) in Bad Saarow, Brandenburg.

The study, compiled by the ifo Institute Dresden on behalf of the Central German Foundation for Science and Education, uses around 170 indicators to compare the economic, social and scientific development between East and West - as well as within East Germany itself. It makes it clear that eastern Germany is not a homogeneous economic area, but is characterized by regional strengths.

Saxony's export success, Thuringia's industrial strength

For example, Saxony's export rate of 32 percent is above the western German average, and Thuringia's industrial share reaches the level of Bavaria. Berlin and Saxony also score highly in terms of research expenditure - both are among the top regions in Europe. Overall, the economic performance of eastern Germany in terms of gross domestic product per hour of employment is 86% of the western German average. Between 2019 and 2024, annual economic growth in the east was 0.3 percent higher than in the west, which is mainly attributed to the economic boom in Berlin.

Less immigration, but higher real wages

The monitor also highlights challenges: At 7.2 percent, the proportion of the population from abroad is significantly lower than in the west (15.6 percent), but wages are over 90 percent of the western level in real terms - thanks to a lower cost of living.

The report was presented at the OWF by the so-called "Saarower Kreis", an association of eastern German economic players that aims to provide fact-based impetus for structural policy. Spokesman Frank Nehring said: "East Germany is not a homogeneous zone of weakness, but a laboratory for the future." It needs more confidence in its own strengths and the courage to think in new ways in terms of economic policy.