Now live: Austria’s economic recovery is delayed

Wifo boss Gabriel Felbermayr said that one should not expect an “economic Christmas miracle” for this year, because the year “ends as weakly as it began.” Nevertheless, Austrians can “look optimistically into the next two years,” said IHS boss Holger Bonin. There is no reason to return to crisis mode, although he spoke of a competition problem (high inflation, high wage agreements) in international comparison.

The economic researchers at Wifo/IHS expect an increase in gross domestic product (GDP) of 0.9 or 0.8 percent in 2024 and of 2.0/1.5 percent in 2025, as they explained in a press conference on Thursday morning. The labor market is proving to be relatively robust and will only deteriorate temporarily, Wifo predicts. The unemployment rate will remain unchanged at 6.4/6.6 percent in 2024 and will fall to 6.0/6.3 percent in 2025.

• Live stream: “Economic Forecast 2023 to 2025” is presented

Inflation will fall to 4.0/3.9 percent next year and to around three percent in 2025. The reasons for the hesitant economic recovery in the coming year are the lower real incomes as a result of high inflation and a global weakness in industry, which are putting a strain on Austria’s economy.

Industry will continue to shrink in 2024

Due to the delayed recovery and high negative overhangs from the previous year, industrial value creation will continue to shrink slightly in 2024 and will not expand strongly again until 2025. In the construction industry, however, the economic low point is unlikely to be reached until 2024.

Climate policy: “Massive efforts required”

Austria’s CO2 emissions are above the targets, said Felbermayr. This year’s reduction of 3.1 million tons is not enough; 3.7 million tons would be needed to achieve climate neutrality by 2040. “Massive efforts will be required” in climate policy, especially in 2024 and 2025, when the economy grows again.

Austria’s economy has experienced a roller coaster ride in recent years: After the corona-related collapse in real economic growth of minus 6.6 percent in 2020, it rose sharply again with plus 4.2 percent in 2021 and with plus 4.8 percent in 2022. In the second half of 2022, an international economic downturn began, which also affected Austria’s economy 2023 led to a mild recession.

The Oesterreichische Nationalbank (OeNB) released its forecast for economic growth for the year in mid-December 2023 screwed back. For this year, it expects a decline in gross domestic product of 0.7 percent, after expecting a slight increase (0.5 percent) in the summer. However, with a view to 2024, she expects a slight economic recovery and a GDP-Plus of 0.6 percent – is a little more pessimistic than the Wifo.