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Why the East German economy is now growing faster: Tesla factory and minimum wage increase in focus
The East German economy is currently growing faster than expected, despite the challenges posed by the corona pandemic, the energy crisis and inflation. According to the Leibniz Institute for Economic Research Halle (IWH), the East German economy grew by three percent last year, while the West only recorded economic growth of 1.5 percent. Growth of one percent in the east and 0.3 percent in the old federal states is expected this year. One reason for the stronger growth in the east is the commissioning of the Tesla car factory in Grünheide. This has contributed significantly to growth of more than 13 percent in Brandenburg's industry. In total …
Why the East German economy is now growing faster: Tesla factory and minimum wage increase in focus
The East German economy is currently growing faster than expected, despite the challenges posed by the corona pandemic, the energy crisis and inflation. According to the Leibniz Institute for Economic Research Halle (IWH), the East German economy grew by three percent last year, while the West only recorded economic growth of 1.5 percent. Growth of one percent in the east and 0.3 percent in the old federal states is expected this year.
One reason for the stronger growth in the east is the commissioning of the Tesla car factory in Grünheide. This has contributed significantly to growth of more than 13 percent in Brandenburg's industry. Overall, however, there is stagnation in industry in both parts of Germany if Brandenburg is excluded. However, industry is only part of the economy.
Another reason for the stronger growth in the east is the increase in the minimum wage to 12 euros per hour in October last year. There are more minimum wage recipients in the East than in the West, which is why gross salaries in the East per employee increased by 6.4 percent last year. According to the head of the IWH, Oliver Holtemöller, incomes will once again grow faster in the East than in the West this year. The statutory pension will rise by 5.9 percent in the east in the summer and only by 4.5 percent in the west.
The forecasts for Saxony are not presented individually by the IWH. However, the Ifo Institute had already published a forecast for Saxony in December and predicted that the economy would move onto a growth path over the course of the year after a previous decline.
The researchers expect that supply bottlenecks will ease and energy will become slightly cheaper. The mild winter helped the economy. However, a possible gas shortage in the coming winter cannot be ruled out, especially when it is very cold. Inflation is said to have peaked, but there is still high demand, thanks in part to government support. Although the high prices are slowing down the construction industry, private consumption is likely to increase.
According to a report by www.saechsische.de
Read the source article at www.saechsische.de