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Austrian Growth Forecast for 2011 Revised Upwards

Austrian Growth Forecast © photocase.com/nortys

© photocase.com/nortys

July 14, 2011

Strong expansion of foreign trade and investments result in improved economic outlook

Thanks to an unexpected strong expansion of foreign trade and investments, Austria's economy is growing faster than predicted in spring. On July 1, 2011, the GDP growth forecasts of the Economic Research Institute (Wifo) and the Institute for Advanced Studies (IHS) were revised upwards from just under 2.5% to 3.0%. However, the two institutes maintain their growth forecasts for 2012, projecting a real growth of only about 2% (Wifo: 1.8%, IHS: 2.1%).

The forecasts for GDP growth in 2011 were again revised due to an unexpectedly strong increase in exports and imports of goods as well as heavy investments in equipment by Austrian companies. This trend has been reinforced by the worldwide upturn, which is, however, expected to lose momentum in the current year. According to Wifo and IHS, international economic risks were also increasing, due in part to higher raw material and energy prices, the US debt crisis and the turbulence in Greece.

Higher energy prices, notably that of oil, push Austria's inflation rate to 3.2% (Wifo) and 3.0% (IHS) respectively in 2011. Employment expansion triggered by the economic upturn is expected to slow down in the current year. The decline in unemployment will therefore also come to a halt, economic analysts predict.

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