The ifo Institute expects economic output to grow by 2.0 percent in eastern Germany in the year ahead, and by 2.2 percent in Saxony. “Germany is on track for a boom. Eastern Germany may stand to benefit from this trend, but is currently lagging slightly compared to the country as a whole due to the domestic orientation of the region’s economy,” says Joachim Ragnitz, Deputy Executive Director of ifo Dresden. ifo Dresden also expects the region’s economy to grow by 2.0 percent this year and 2.1 percent growth in Saxony. “This means that economic growth in eastern Germany has fallen behind the nationwide figure for the first time in three years,” adds Ragnitz.
Employment is expected to continue to rise. The ifo Institute expects the number of persons in employment to increase by over 110,000 in eastern Germany in 2017, with a 20,000 upturn in the Free State of Saxony. In 2018 this figure will increase by around 85,000 in eastern Germany and 20,000 in Saxony.
The economic upswing is now broader-based and more stable. Exports and investments both increased sharply over the course of the year. This also benefitted capital goods producers and commercial construction in eastern Germany, which clearly gained impetus. After a very strong 2016, the growth rate in residential construction, by contrast, slowed slightly in 2017.
Industrial dynamics are expected to gather impetus for the rest of the forecasting period, which will positively impact corporate service providers in eastern Germany and Saxony. Consumer-oriented service providers will continue to benefit from the favourable situation in the labour market, despite a slight loss of impetus in this sector.
