The primary cause for East Germany's economic collapse in the late 1980's was the unemployment and severe discontent.
East Germany was heavily influenced by USSR, which at that time was showing signs that it'll be falling apart and that it will not last long, and it's economy was weakening for some time. This lead to fall in the economy of East Germany and lots of factories and business that were led by people from USSR or collaborated with it, fall apart, shut down. Lots of people were left without work, without income, in a country that was in difficult situation even before that. So the discontent of the people came to surface and they organized, and protested, and rioted, against the situation, and their desire to be merged with the other half of Germany, West Germany.