Economic activity is projected to slowly recover from the current downturn, with GDP rising by 0.2% in 2023 and 1.6% in 2024, supported by stronger domestic demand. The economic sentiment in most sectors show a slight upward trend. The UniCredit Bank Austria Purchasing Managers’ Index reached its highest level in ten months at 43.0 points – nevertheless the threshold of 50 points, which signals growth, has not been reached. The turnaround in the inventory cycle and rising real wages due to lower inflation should trigger a moderate consumption-led recovery in the course of 2024. It is expected for the GDP to grow by 1.5% in 2025, also supported by investment.
In January 2024, inflation decreased to 4.5%. Although it will remain higher than in the eurozone, it is expected to continue to decline, albeit slowly. Despite a noticeable increase in many service prices due to rising material and personnel costs, UniCredit Bank Austria anticipates inflation to average 3.6% in 2024 and 2.3% in 2025.
Unemployment is projected to increase in 2024, with a slight easing expected in 2025. This is primarily due to the weakness in the industry and construction sectors. However, a slight improvement is anticipated towards the end of the year. The projection indicates an average unemployment rate of 6.7% in 2024, which is expected to decrease to 6.5% by 2025 due to stronger GDP growth.
