Austria 2025: Growth remains standing - what now?

Austria 2025: Growth remains standing - what now?

Österreich - Economic researchers from Austria have recently published an updated forecast on the country's economic development. The wifo and the IHS report that a minimal economic growth of 0.0% or 0.1% is expected for 2025. This adaptation represents a significant improvement compared to the spring forecast, in which a decline of 0.3% (WIFO) and 0.2% (IHS) was predicted.

Consumers have shown signs of stabilization, whereby the consumption mood was positively influenced, especially through developments in Germany. Nevertheless, the researchers see a problem child: the budget deficit is estimated to be 4.1% (WIFO) or 4.4% (IHS) of the gross domestic product in 2025, which exceeds the Maastricht limit of 3%. For 2026, experts expect a deficit of 3.9% (WIFO) and 4.1% (IHS).

household and debt

Another important aspect is the increase in the state debt rate, which could increase to 85% by 2026. This would further tighten the financial situation of Austria, in particular in view of the significant increases in pension expenditure, personnel expenses and expenses in key areas such as climate and security, as in Parliament .

The encompasses of the federal government that are encrypted from January to September 2024 amount to EUR 15.4 billion, which represents an increase of 13.1% compared to the previous year. The development in the income, which was affected by weak results in areas such as sales tax and the real estate sector, is particularly critical. In contrast, some levies show how wage tax is a dynamic positive development.

economic challenges

In addition, the WIFO and IH's researchers warn of "serious downward risks", which could be caused by geopolitical tensions and the US customs policy. These framework conditions cloud the perspectives for further growth. In an international comparison, Germany will forecast grow up of 0.3% in 2025, while the United States can expect 1.4% (WIFO) or 1.7% (IHS). China will expect a significantly higher GDP growth of 4.2% (WIFO) or 4.5% (IHS).

The inflation rate in Austria is estimated to be 2.9% for 2025, with a decline to 2.2% (WIFO) or 1.9% (IHS) in the following year. In view of the historical development of consumer prices, which have increased more than in the euro area, these perspectives are significant in view of the historical development of consumer prices. In addition, an increase in the unemployment rate is forecast to 7.5% for 2025 before it drops to 7.3% in 2026.

Der Bund hat angekündigt, dass das Maastricht-Defizit bis 2024 bei 3,3% bzw. 3.9% of GDP is forecast. This indicates a deterioration in the financial situation, which is also reflected in the debt rate, which is expected to increase to 79.3%.

These financial and economic challenges require extensive reforms to ensure competitiveness. The discussion about a possible introduction of an inheritance tax for the financing of such measures was rejected by the industrial association, which fears negative effects on entrepreneurial families.