2023-12-15 09:08:07
The Oesterreichische Nationalbank (OeNB) has scaled back its forecast for economic growth in 2023. For this year it expects a decline in gross domestic product of 0.7 percent, following expecting a slight increase (0.5 percent) in the summer. Looking ahead to 2024, however, she expects a slight economic recovery and a GDP increase of 0.6 percent. Despite the decline, inflation is expected to still be 4 percent in 2024.
Due to high energy prices and the expiration of catch-up effects following the corona pandemic, the domestic economy has been in recession since the second half of 2022, according to the OeNB. The National Bank attributes the expected decline in GDP for 2023 primarily to a decline in investments and slower consumption. At the turn of the year, Austria is likely to remain in recession, and a slight decline is expected once more in the fourth quarter.
The National Bank is somewhat more optimistic for the coming year. It expects a recovery in consumption, supported by strong increases in real income as a result of inflationary compensation for wages and pensions. Economic growth of 1.7 and 1.3 percent is forecast for 2025 and 2026, respectively, in anticipation of higher investments and better export dynamics.
Prices remained at a high level this year. In 2023, measured once morest the EU-wide comparable HICP, they will increase by 7.7 percent. In the summer, the OeNB estimated the annual inflation rate at 7.4 percent. The continued high inflation can be attributed to the delayed passing on of falling energy prices as well as the sharp rise in prices for services and food. As a result of further easing of energy prices, she expects inflation to reach 4 percent in 2024. The rate is expected to be 3 percent in 2025 and 2.5 percent in 2026.
The weak economic development will also be reflected in the labor market in 2024. As a result of the recession, the unemployment rate will rise from 6.5 percent this year to 6.8 percent. The OeNB assumes that the rate will decline to 6.6 percent in 2025 and to 6.5 percent in 2026.
When it comes to public finances, the OeNB assumes that Austria’s new debt (deficit) will decrease thanks to the abolition of the Corona measures. This year it will be minus 2.6 percent. In comparison, it is likely to rise slightly once more in the following years despite the improved economy. The debt ratio, measured as debt as a share of economic output, will be 76.6 percent this year, but will only improve slightly over the forecast horizon, according to the OeNB forecast published today.
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