Wifo and IHS expect growth this year to be only 3.9 and 3.6 percent respectively. The institutes expect real GDP to increase by only 2.0 to 2.3 percent next year.
In addition to the war and the sanctions against Russia, the resulting energy price shocks and the worsening production and supply problems are also having a negative impact on the economy. The institutes hope that war and inflation will not depress consumer sentiment and that people will only buy essentials.
The economy is likely to have grown strongly in the first quarter, but the economic research institute (Wifo) expects only very slight growth compared to the previous quarter for the second and third quarters. Tourism will be the mainstay of the economy this year, for the Institute for Advanced Studies (IHS) private consumption as a whole.
Because of the catch-up potential of tourism after Corona, half of the economic growth this year should be attributable to accommodation and gastronomy, believes Wifo. In industry, added value will not grow. The persistently high inflation is dampening the expansion of private consumption. The labor market is developing well.
Driven by the energy price shock, consumer prices are likely to increase significantly more this year and next year, at 5.5 percent and 2.3 percent, respectively, than in the last forecast in December, the IHS said on Friday – Wifo even expects inflation rates of 5.8 and 3.2 percent.
At the beginning of 2022, according to IHS, the domestic economy was still in a strong catching-up process, after a brief setback due to the corona lockdown at the end of 2021. In January and February, gross domestic product was even above the pre-crisis level again, and the leading indicators pointed to further recovery.
But then Russia’s war of aggression against Ukraine and its economic consequences slowed down the upswing. The duration of the military conflict is currently difficult for the IHS to estimate; the forecast assumes that sanctions will continue to exist, but without extending them to commodity trading.
Source: Nachrichten
