Growth stagnates

WIFO/IHS present their summer forecast

(Bild: APA/GEORG HOCHMUTH)

Wifo and IHS presented their summer forecast for economic development in 2024 and 2025 on Wednesday. The latest economic data gives little hope of an improvement in the situation. Following the decline in 2023 (minus 0.8 percent) and stagnation in 2024, GDP will therefore not grow significantly again until 2025 (plus 1.5 percent).

The Austrian economy has been in a weak phase since the end of the second quarter of 2022. There is a lack of expansionary impetus both domestically and abroad.

Sluggish domestic and export demand caused industry and the construction sector to slip into recession, while the unfavorable order situation combined with declining final demand and depressed sentiment dampened the willingness to invest.

Austria is lagging behind
At the beginning of June, Wifo CEO Gabriel Felbermayr gave a rather pessimistic outlook for 2025: "Unfortunately, our forecasts show that we will still not be where we were before the coronavirus crisis in terms of GDP per capita in 2025, while the eurozone is already above pre-crisis levels."

Unemployment rate rises to 6.9 percent
Wifo and IHS are also updating their forecast for inflation and unemployment. In March, they had assumed an inflation rate for consumer prices of 3.8% and 3.5% respectively. Although this meant a halving compared to the previous year, it was above the eurozone average and well above the European Central Bank's target value. According to the March forecast, the unemployment rate according to the national definition is likely to rise to around 6.9% this year.