Austria's economy 2025: hope for slow growth!

Austria's economy 2025: hope for slow growth!

The Organization for Economic Cooperation and Development (OECD) forecasts for the Austrian economy are mixed. According to a recent report, the economy is expected to contract by 0.5 percent in 2024. This gloomy outlook was announced on Wednesday, with the OECD also predicting a recovery in 2025: Gross domestic product (GDP) is expected to grow by 1.1 percent, followed by a rise of 1.4 percent in 2026. In comparison, the G-20 countries are expected to record significantly higher growth of 3.3 percent next year South Tyrol News reported.

Although the economic trend reversal is indicated, worrying factors are also emerging. The Wifo and IHS institutes recently made a cautious estimate and expect lower growth of 1.0 and 0.8 percent respectively for 2025. Inflationary tendencies also remain a hot topic, which according to the OECD should fall back close to the ECB target of 2.0 percent in 2025. However, it is also expected that unemployment will rise and investment activity will remain limited overall, especially in the struggling industry.

Structural challenges in view

The OECD also warns of structural challenges that the country must address to cope with future economic shocks. This also includes adapting the framework conditions for freelancers and creating better incentives for women to make it easier for them to enter the labor market. These findings illustrate the need for further reforms to strengthen economic strength and corporate dynamism in Austria. The shadow of its weakening neighbor Germany, whose economy only expects growth of 0.7 percent in 2025, is an additional alarm sign for Austria and clearly shows the urgency of reforms.