East German economy remains far behind the West
A new index shows that the economic catch-up has barely progressed for five years.
Follow-up to: Eastern Germany seeks skilled workers despite high unemployment Saturday, 3 October 2026, 19:00
The five eastern German Länder reached roughly 79 per cent of the economic level of West Germany in 2025, according to a new index from the Institut der deutschen Wirtschaft. The catch-up has therefore remained stuck at roughly the same level for five years.
This is a new development alongside the previously described staff shortage in eastern Germany. The new analysis is not primarily about vacancies, but about the broader economic gap between the former East and West German Länder.
The IW calculated that the five eastern German Länder reached almost 79 per cent of the West German level in 2025, compared with just over 78 per cent a year earlier. Since 2020, the index has fluctuated between 78 and 79 per cent. In 1991, the ratio stood at 51 per cent according to the same method.
The index measures more than output per head. The institute also considers productivity, the capital stock, research personnel, labour-force participation, unemployment and self-employment. The result therefore says something about the broader economic structure, but not about the income or prosperity of every individual resident.
According to the IW, labour-force participation in the east remained below that in the west. Progress has also been limited in terms of the capital stock. The share of employees in corporate research and development remains particularly low: according to the index, the East German economy reaches just over 46 per cent of the West German level.
There are exceptions. Brandenburg is benefiting from the Tesla factory in Grünheide, Dresden has an important chip cluster and several Länder are expanding their renewable energy production. Such projects can stimulate regional growth, but do not automatically make up for the absence of large headquarters, private research departments and sufficient numbers of young workers.
Demography makes the challenge greater. The IW warns that, in a scenario without immigration, the eastern population could shrink by more than a fifth by 2045. The European Commission also described the German economy as weak this year and demand for labour as limited. The debate is therefore about investment as well as education, labour migration and the attractiveness of the regions.
One story, several perspectives
What is established
- The economic ratio between East and West Germany remains below 80 per cent according to a composite index.
- Population and the labour market constitute a structural challenge in the east.
- There are regional exceptions with strong industrial and technology clusters.
Left
Arguments The state must continue investing in infrastructure, education, research and public services to reduce regional disparities.
Values Equal opportunities, regional solidarity and public investment.
Consequences More government support could reduce disparities, but requires long-term funding and evaluation.
Centre
Arguments Success requires a combination of local strengths, better links with knowledge institutions and targeted labour migration.
Values Pragmatism, regional development and social cohesion.
Consequences A targeted approach can support growth without imposing the same policy on every region.
Right
Arguments Competitiveness should come primarily from entrepreneurship, lower regulatory burdens and more attractive conditions for private investment.
Values Individual responsibility, market forces and efficiency.
Consequences Less bureaucracy could attract investment, but will not automatically solve demographic and educational problems.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The percentages, composition of the index and demographic projection were checked against the IW. The broader economic context was checked against the European Commission and Destatis; differences between the index and official GDP statistics were explicitly noted.
- confirmed The five eastern German Länder reached almost 79 per cent of the West German level in 2025. — Figure from the IW-Einheitsindex. source
- confirmed The ratio has fluctuated between 78 and 79 per cent since 2020. — Description of the index by the IW. source
- confirmed The share of economic research personnel in the east is around 46 per cent of the West German level. — Figure from the IW index. source
- confirmed The German economy grew by 0.2 per cent in 2025. — Official figures from Destatis. source
Editor's note
The 79 per cent score comes from an IW index and is not a separate official GDP statistic. The analysis has therefore been attributed as the institute’s research finding; independent sources do confirm the broader weakness of the German economy.Sources
- Osten holt wirtschaftlich seit fünf Jahren nicht mehr auf — Institut der deutschen Wirtschaft
- Country report - Germany — European Commission
- Gross domestic product up 0.2% in 2025 — Statistisches Bundesamt
The story so far
- Saturday, 3 October 2026, 19:00 Eastern Germany seeks skilled workers despite high unemployment
- Sunday, 4 October 2026, 13:02 East German economy remains far behind the West (this article)
More on this in Dutch media
- De Telegraaf — „duitsland oost-duitsland”
- Trouw — „duitsland oost-duitsland”
- RTL Nieuws — „duitsland oost-duitsland”