Budget deficit higher

Wifo/IHS lower forecast: recession also in 2024

Both institutes expect real economic output to fall by 0.6 percent this year, compared to the summer forecast of zero and plus 0.3 percent respectively.

(Bild: ©natanaelginting - stock.adobe.com)

The economic researchers at Wifo and IHS have revised their economic forecast sharply downwards compared to the June estimate and now expect the second year of recession in a row. The weakening economy is causing unemployment to rise.

Both institutes expect a decline in real economic output of 0.6 percent this year, compared to the summer forecast of zero and plus 0.3 percent respectively. In addition, the forecast for the public budget deficit in 2024 has been significantly raised to 3.7 and 3.5 percent of GDP respectively.

Weak consumption, fewer orders
The downturn in business in industry and construction in particular, as well as weak consumption, will have a negative impact on economic development in Austria in 2024. Higher expenditure and a weaker increase in tax revenue will cause the government budget deficit to rise further. 

Inflation significantly lower
After the record inflation years of 2022 and 2023 with 8.6% and 7.8% respectively , inflation is expected to be significantly lower this year at 3.1% and 3%. In the coming year, economic researchers expect consumer prices to rise by 2.2% and 2.4% respectively.

Unemployment on the rise
Wifo and IHS expect unemployment to rise at the same rate. The unemployment rate is set to rise from 6.4% in 2023 to 7% this year and 7.2% next year.

Gross domestic product set to grow in 2025
Last year, real gross domestic product (GDP) shrank by one percent. For 2025, the Economic Research Institute (Wifo) and the Institute for Advanced Studies (IHS) expect a boost from abroad and rising consumer spending. Domestic GDP is then expected to grow by one percent and 0.8 percent respectively.