The Austrian economy remains slow

In February 2024, the economic assessments of domestic companies deteriorated again, both in terms of the current situation and expectations for the coming months, as the economic research institute Wifo announced in a release on Friday. The continued high loan interest rates are having a braking effect. The growth in credit demand has recently weakened.

“The high loan interest rates and the more difficult access to mortgage loans caused the growth in loan demand to collapse in Austria,” said Wifo economist Marcus Scheiblecker. The Credit Institutions Real Estate Financing Measures Ordinance (KIM-VO) represents an additional hurdle. A rapid improvement via falling interest rates is unlikely to occur for the time being: The European Central Bank (ECB) left the key interest rate at 4.5 percent yesterday, Thursday. Market observers expect a first reduction in the summer – depending on the development of inflation.

• Read more: The ECB is not yet attacking the key interest rate, but savings rates are already falling slightly

economic slowdown

The economic downturn in Austria has been going on since the third quarter of 2022, interrupted only by a slight increase in economic output at the beginning of 2023, as Wifo writes. The sharpest decline was observed in the second quarter of 2023. In the third quarter of last year, the gross domestic product (GDP) shrank again. Statistics Austria calculated stagnation for the fourth quarter.

The situation in Germany is similarly bleak. GDP there fell by 0.3 percent (real) in the fourth quarter of 2023 after stagnation in the previous quarter. According to the information, the mood among companies is subdued. According to the research institute, the economic situation in the euro area is similar to that in Germany and Austria, with slightly higher growth rates.

Due to the ongoing recession, the situation on the labor market in Austria is also increasingly deteriorating. According to preliminary estimates, wage employment in February was only slightly higher than the previous year. After all, inflationary pressure has recently eased in this country.

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