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Eastern Germany still lags 25 years after Berlin Wall's fall

24th September 2014, Comments 0 comments

Twenty-five years after the fall of the Berlin Wall, the economy of Germany's ex-communist East is still struggling to catch up to the former West's, the government said Wednesday.

Despite progress, Germany's five states that were behind the Iron Curtain until 1989 have a smaller economy with gross domestic product per inhabitant a third lower than in the west of Europe's top economy, it said in a report.

Iris Gleicke, the government's representative for the "new" states, said Germany's 1990 reunification had presented a historic one-off challenge in rebuilding the former East and now showed an overall "pleasing" picture.

Presenting the annual reunification assessment on as Germany gears up to mark the 25th anniversary of the Wall's fall in November, she said convergence of living conditions between East and West had "largely succeeded".

"In important areas like the economy or on the job market there still exists however a marked gap with the states in the West," she said in a statement.

Gross domestic product per inhabitant in eastern states has more than doubled since the beginning of the 1990s but is still only around two-thirds the western level, the report showed.

It also pointed to the paucity of big companies moving to eastern Germany as a key factor in lagging worker productivity and said that convergence with the West had been slow in recent years.

It noted that the post-1990 eastern landscape had been shaped by small and medium-sized companies but that no DAX-listed firm had its headquarters in the former East.

And it highlighted that unemployment was 10.3 percent compared to 6.0 percent in western Germany, despite 2013 having seen the lowest annual average in the east since reunification.

A separate report, also released Wednesday, by the Ifo economic institute painted a similar picture.

It said the economy of former East Germany had grown 20 percent between 1995 and 2013, compared to 27 percent in the former West.

Some 75 percent of ex-East Germans, or "Ossis" as they are often called in Germany, view reunification positively compared to 48 percent of "Wessis", according to a poll published Wednesday.

East Germans still miss the school and health systems under communism, the survey by Infratest Dimap said.

At least 1.5 trillion euros ($2.0 trillion) have been invested in building up the country's east, according to estimates by university researchers, mostly via a solidarity tax levied on taxpayers, due to run until 2019.

© 2014 AFP

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