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Austria’s Economy in 2010

Austria'sEconomy © Dorn-Fussenegger

© Dorn-Fussenegger

May 18, 2010

Mediocre growth

According to the spring forecast of the European Commission, the Austrian economy will recover faster than originally expected. Austria’s economy is likely to grow by 1.3% in 2010. The growth forecasts for the EU altogether were also revised upwards to 1.0% for the current year. The brighter economic outlook is also based on the surprisingly robust improvement in the sentiment of Austrian consumers. Austrian industry also seems to be on a sound road to recovery. Orders continue to improve and international sales increase. After Austria’s industry contracted by over 13 percent in real terms in 2009, output is likely to grow by at least 4 percent in 2010.

2.3 Billion Austrian Loan to Greece
Just like all the other euro-zone countries, Austria participated in the rescue package for the highly indebted Greece. Austria’s share of the of the euro-zone countries’ (80 billion EUR) and the International Monetary Fund’s (30 billion EUR) rescue package for Greece amounts to about 2.3 billion EUR. Greece is expected to repay its loan within three years at a five-percent interest rate.

Austria’s budget
Austria’s own budget deficit amounted to 3.4 percent of GDP in 2009 as a result of a slump in revenue. Bank Austria economists expect the deficit to rise further, to up to 5 percent of GDP in 2010. The Austrian government aims to reduce the budget deficit to 4 percent of GDP in 2011 through cuts in expenditure, and to increase revenue through relatively moderate tax measures. Experts believe however, that restoring the government budget to a healthy basis will require some structural changes.