Bleak outlook

Economic growth: Austria almost last in the EU

Although the trend is picking up again, the EU is lagging behind.

(Bild: APA/HELMUT FOHRINGER)

Austria does not fare particularly well in the European Commission's latest winter forecast. In comparison with the other countries in the eurozone (20 countries), Austria only ranks third to last. In general, economic growth in Europe is weakening more than recently assumed.

Austria is expected to see economic growth of 0.6 percent this year. In a direct comparison of nations, only Germany (0.3 percent) and the Netherlands (0.4 percent) are behind this year.

Things do not look much better for the following year either: Although the Commission expects Austria to grow by 1.4 percent again in 2025, this is still the fourth worst outlook in the eurozone.

EU lowers forecast again
Growth of 0.9 percent is expected for the EU in 2024 and 1.7 percent in 2025. Economic output in the eurozone is expected to grow by 0.8% and 1.5% respectively. In its winter economic forecast published on Thursday, the Commission once again lowered its growth expectations.

In its autumn estimate, the Brussels authority had already assumed that the economy would grow more slowly this year than previously expected. In November, however, its forecast for 2024 was still 1.3% for the EU and 1.2% for the eurozone. At that time, the domestic economy was still predicted to grow by one percent.

Inflation alsosetto remain above the EU average
Annual inflation is likely to fall faster than recently forecast: in the countries with the common euro currency, it is expected to fall further to 2.7 percent in 2024 and to 2.2 percent in 2025, while inflation in the EU is likely to fall from 3.0 percent this year to 2.5 percent next year. At 4.0% this year and 3.0% in 2025, the Austrian figure is still above average.

Falling inflation raises hopes
As the EU narrowly escaped a technical recession in the second half of 2023, the EU Commission still sees the outlook for the EU economy in the first quarter of 2024 as weak. However, it expects economic activity to gradually accelerate this year. Falling inflation and a resilient labor market should encourage a recovery in consumption. Slowly loosening credit conditions should boost investment.

In addition, trade with third countries is expected to normalize after a weak performance in the previous year. However, the Commission sees risks in view of the ongoing geopolitical tensions and the risk of a further escalation of the conflict in the Middle East.