Economy: The recovery phase is over

After 2022 was still heavily influenced by the recovery following the corona pandemic, 2023 will be a year of low economic growth with high prices. However, there are slowly signs of a trend reversal in inflation.

It has been clear since autumn that Austria will see the dreaded stagflation in 2023 for the first time in almost 50 years. At that time, the economists from Wifo and IHS in their forecasts that in the coming year growth will fall to barely noticeable values ​​above the zero line, while inflation will remain high at between six and seven percent. This view is confirmed in the winter forecast presented today, Thursday. The economic researchers expect growth of 0.3 (Wifo) and 0.4 (IHS) percent for the coming year. Inflation is expected to range between 6.5 and 6.7 percent.

In contrast to the autumn, however, the current economic situation has already weakened significantly. “The global economic downturn also hit Austria in the third quarter of 2022. Exports and the added value of domestic industry shrank, while economic output stagnated,” says Wifo’s forecast. And: “In the winter half of 2022/23 that should BIP drop noticeably.” The current situation at the IHS is similarly bleak. There, a minus of 0.5 percent is expected for the fourth quarter and a minus of 0.3 percent for the first three months of the coming year. “The domestic economy should not expand once more and return to a restrained growth path until spring 2023,” it says.