For the current year, the experts from WIFO expect a GDP plus of 4.8 percent, the IHS assumes economic growth of 4.7 percent.
The Ukraine war has led to a drastic increase in energy prices. But the sharp rise in raw material costs has also pushed up inflation. This and the high level of uncertainty are slowing down the expansion of the global economy. Therefore, the economic experts only expect low growth with relatively high inflation. The WIFO assumes economic growth of 0.2 percent for the coming year 2023, the IHS of 0.3 percent.
There was a strong increase in fixed investments in the previous year. Since the beginning of the year, however, the investment climate has cooled down significantly. According to IHS, this is related to the weakening of the international economic outlook. The resulting sharp rise in energy prices are additional braking factors. Accordingly, a decline in fixed investments is to be expected for this year, but the economic experts expect a small plus here for 2023.
Impact on prices only slowly
According to IHS, a slight upturn is not expected until spring 2023 – provided the gas supply can be maintained. The IHS forecasts that private consumption should remain the growth driver this year with an increase of 4.7 percent. WIFO is more cautious for the current year: Households with limited liquidity would reduce their consumption. Due to the relatively high inflation, an increase in these households is to be expected. On the other hand, households that do not have liquidity problems would consume more. After all, the already negative real interest rate continues to fall due to inflation, which stimulates consumption. WIFO expects consumer spending to increase by 3.8 percent in the current year and by 1 percent in 2023.
However, the predicted flattening of economic momentum will only slowly affect prices, WIFO predicts. WIFO therefore expects inflation to fall to 6.6 percent. With 6.8 percent inflation for the next year, however, the IHS is assuming a less optimistic forecast. According to the economic researchers, the high consumer price inflation will lead to higher wage agreements in 2023 in particular. After all, the IHS expects gross real wages to fall by 4.2 percent this year. A small increase is not expected until 2023.
Unemployment figures are still very positive, although the number of unemployed has risen slightly in recent months. For this year, the two institutes are expecting an increase in the number of employees by 2.7 and 2.8 percent respectively. But in 2023, the unemployment rate is likely to rise from around 6.4 percent to 6.7 percent, WIFO and IHS agree.
Source: Nachrichten
