WIFO boss Felbermayr

“The stalemate since the election is not good”

(Bild: krone.tv)

Gabriel Felbermayr, Director of the economic research institute, takes a critical view of the current domestic political situation. For example, in the now months-long negotiations on a future coalition between the ÖVP, SPÖ and NEOS: "There should be clear announcements on how to move forward. A plan for the future that must not only consist of savings, but also a clear reform agenda on how economic growth can be brought back to Austria."

The exact cause of the current dismal economic situation and the dramatic budget deficit remains unclear. Felbermayr: "There is currently a 20 billion euro gap between revenue and expenditure in the budget. Things started to slide around 2016. You can see this very clearly in Germany, and here in Austria too. In an international comparison, we can see that we have been losing ground since 2016. Not so dramatically at first, but since the triple crisis of coronavirus, supply chains and inflation, this has now accelerated. You could say that something happened in the Austrian system around 10 years ago. Likewise in Germany."

More strength in new areas
The situation is currently particularly difficult in industry and industry-related services. Felbermayr: "The industrial sector will 'unwind' again. But there are headwinds: energy prices are high. It is unlikely that we will reach the favorable level of the USA. We also have a locational disadvantage when it comes to wages. But we also have to look at other areas. Tourism is doing well, but that is not necessarily a sector on which we can build our entire future. We need to be much stronger in the new fields that are opening up. These are green technologies, for example. We are very strong in patents in Austria."

Politics not bold enough
The head of WIFO sends a small warning shot in the direction of the ÖVP. Felbermayr: "We are doing ourselves a disservice if we now go back to the technologies of the 20th century. According to the motto 'Let's make combustion engines again'. Although combustion engines are good, that doesn't improve the prospects for the next 20 years. We would therefore have to be much bolder in our approach to new technologies." In general, politicians in Austria are also not acting boldly enough. The WIFO boss summarized his statement, also with regard to the protracted negotiations on the sugar coalition: "It is clear that the impasse since the election is not really good."  

Watch the whole interview in the video above!