East with stronger economic performance than the West

According to an economic forecast by the Ifo Institute in Dresden, the East German economy is growing despite the general economic downturn. Contrary to the nationwide trend, gross domestic product in the east is likely to increase by 0.3 percent this year, according to the institute. In Germany as a whole, economic output is expected to fall by 0.1 percent.

"The service sectors in eastern Germany in particular are expanding strongly, and the weakening industry has less weight here overall," said Joachim Ragnitz, Deputy Director of the Ifo Institute in Dresden. His colleague from Munich, Robert Lehmann, added: "The structural change in the manufacturing industry is also affecting the East German economy, but with less intensity due to its specialization."

Decline forecast for Saxony

In Saxony, however, a decline in gross domestic product of 0.5 per cent is forecast. This is indicated by the widely varying development in the first half of 2024. The background to this is the greater dependence on industry, which has a strong impact on the overall result. The concentration on the automotive industry in particular is having a negative impact.

In terms of employment, the Ifo Institute expects a slight increase of 0.1% in eastern Germany in 2024 in view of moderate growth and demographic change. In Saxony, however, a decline of 0.1 percent is expected.

Growth also in 2025

In the coming year, the price-adjusted gross domestic product in the east is likely to increase by 0.7 percent. The Ifo Institute expects a trend reversal for Saxony. Moderate growth of 0.4 percent is predicted. Growth will once again be driven by the consumer-related service sectors, while industry will continue to shrink.