Ifo: eastern economy will not catch up with the west until 2030

ifo: Eastern economy will not catch up with the West until 2030

This is what joachim ragnitz of the ifo institute in dresden said at a business talk in erfurt on monday. He believes it is unlikely that this goal will be achieved by the time the solidarity pact expires in 2019.

Regions such as those around jena, potsdam, dresden and leipzig are already in a good position and could therefore catch up more quickly. But the new federal states, with sparsely populated and structurally weak areas, were predominantly rural. "It drags down the overall picture," ragnitz said.

Ragnitz sees another reason for the weaker economic development in the east than in germany as a whole in the demographic development. A rapidly aging and shrinking population in the new german states is leading to a loss of purchasing power.

Currently, the economy in the east is in a significant downturn phase, it said. "But we are a long way from a recession," ragnitz emphasized. Gross domestic product (GDP) in the east is expected to grow 0.5 percent in 2013, it said.

According to a study by the management consultancy roland berger commissioned by the thuringian ministry of economics, investments of more than 1,000 billion euros are needed by 2030 to enable the east to catch up with the west of germany in terms of economic strength. According to the study, the catching-up process in the east has been treading water for several years, despite successes in attracting businesses and lower unemployment in terms of economic productivity and gross wages.

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