Austria's economy: increasing risks and weak economic forecasts

Austria's economy: increasing risks and weak economic forecasts

The Austrian National Bank (OeNB) has significantly revised down its economic forecasts for the country. How oe24.at reported, a decline in economic output of 0.9 percent is expected for 2024 and modest growth of just 0.8 percent for 2025. These values ​​were adjusted downwards by 0.2 percentage points compared to the September forecast. In addition, the unemployment rate is expected to increase to 7.0 percent in 2024 and to 7.4 percent in the following year.

Inflation and budget deficits are rising

Although inflation is expected to decline, the OeNB predicts that the European Central Bank will not achieve its inflation target of two percent in 2027. The budget deficit, which will rise to 4.1 percent of gross domestic product as early as 2024, is well above the Maastricht target of three percent. The forecast cites the weak economy, changes in the automotive industry and high energy and wage costs as the main reasons. It was also found that households' real disposable income could decline in 2024, which would affect private consumption.

The OeNB emphasizes that the impact on growth is accompanied by numerous risks. A possible deficit reduction by the new government could have a significant impact on growth in 2025 to 2027. In addition, an increase in tariffs by the USA under the leadership of Donald Trump is identified as an additional risk that could have a negative impact on the Austrian economy, as well OeNB.at confirmed in their forecasts.