2023-07-20 10:45:45
The domestic economy is in a phase of economic weakness following record inflation and the upheavals resulting from the war of aggression once morest Ukraine, but should overcome this in the coming year and return to a restrained growth path, expects the Institute for Advanced Studies (IHS). “Inflation remains high, but with a clear downward trend,” said IHS economist Helmut Hofer.
This year, the IHS is still expecting an inflation rate of 7.5 percent, but by 2027 it is expected to drop to 2.3 percent. For the period from 2023 to 2027, the institute is assuming an average inflation rate of 3.8 percent, according to the current medium-term forecast presented by the IHS on Thursday.
While the Austrian economy is still stagnating this year (+0.5 percent), growth of 1.4 percent and 1.5 percent is expected for 2024 and 2025. In 2026 and 2027, however, economic output is likely to weaken once more to 1.2 percent each. For the forecast period from 2023 to 2027, the IHS expects real gross domestic product to increase by an average of 1.2 percent per year. In the previous 5-year period, growth averaged 1.3 percent.
Private consumption will develop better than recently. “In the past five years, the development of private consumption in Austria was characterized by the corona-related restrictions and the subsequent catch-up effects,” said Hofer. High inflation is still dampening consumption this year, but overall private consumption is a key pillar of the economy, with average growth of 1.3 percent per year.
The IHS also sees the labor market positively, although it needs comprehensive strategies to counteract the growing shortage of skilled workers, said IHS boss Holger Bonin. Starting from 6.5 percent in 2023, the unemployment rate is likely to fall to 5.8 percent by 2027. At the same time, employment should increase by an average of 0.9 percent per year.
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