East German economy decades from catching up with west

Twenty years after the fall of the Berlin Wall, the formerly communist eastern half of Germany is still decades from catching up with the western part of the country's economy, according to a report published Friday.

• Germany signs €3 bln in deals with Kazakhstan (8 Feb 12)
• Exports top €1 trillion despite euro crisis (8 Feb 12)
• GM threatens major job cuts at Opel (8 Feb 12)

The states that once made up East Germany currently have a per capita Gross Domestic Product that is just 71 percent of what was West Germany. By 2025, that gap will only close slightly, to 75 percent, said the study issued by the HypoVereinsbank.

The gap persists despite hundreds of billions of euros that have flowed east in infrastructure projects and tax breaks to attract investors and jobs.

Tougher still, the report said its estimates for 2025 were based the assumption that eastern Germany’s economy continues to grow as robustly as it has for the past five years, when growth in the east has regularly exceed the west by three percent.

Transport Minister Wolfgang Tiefensee, who’s responsible for economic development in the east, has said he wants the gap between the halves of Germany to be erased within the next ten to 15 years. The HypoVereinsbank report says that goal is “unrealistic.”

The report did highlight the “continually upward directed development” in the east since 1989, including highly modernised infrastructure and internationally competitive firms. However, the report said too few of those firms are from the east, most belong to west German or international companies.