Germany's outgoing leader, Chancellor Angela Merkel, has called on citizens to "shape the future together", and be open and tolerant, in a speech marking 31 years since the reunification of the East and West of the country.

Regional political and economic divisions were revealed after a close result in last Sunday's national election, when no party won an overall majority. Coalition talks are underway but are expected to last months.

The Social Democrats, or SPD, narrowly won the election, and polls show the party is favored to lead an alliance with the business-friendly Free Democrats, or FDP, and the environmentalist Greens, said the Associated Press.

But the conservative bloc, including the Christian Democrats, or CDU, and Christian Social Union, or CSU, is also pursuing coalition talks, despite a record low result.

The far-right Alternative for Germany party captured 16 constituencies in the east of the country, even as its overall share of the vote dropped nationwide, noted AP.

Merkel, who will step down once a new government is formed, told an audience in the eastern city of Halle that "mentally and structurally, unification hasn't been completed yet".

After her 16 years serving as chancellor, she urged Germans to build a shared future that draws on their diverse backgrounds.

She said German reunification had brought "so many new opportunities" for people from the former East, where she grew up, but that many of them suddenly "found themselves in a dead end", the Reuters news agency reported.

In 2015, Germany opened its borders to allow in more than 1 million migrants to enter, amid turmoil in the Middle East, which Reuters described as the most controversial act of her time in power.

In what was likely one of her last speeches, Merkel said "each and every individual must be able to feel heard and belong", and called for a Germany "in which we shape the future together".

"Be open to encounters, be curious about one another, tell each other your stories, and tolerate your differences. This is the lesson from 31 years of German unity," she said. Merkel said the country must keep working for democracy. "Democracy isn't simply there. Rather, we must work for it together, again and again, every day."