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Austrian Economy has comparatively favorable economic fundamentals

July 2, 2012

IMF in Washington DC analyzes Austrian macroeconomic outlook

“While Austria has comparatively favorable macroeconomic fundamentals, these need to be strengthened further, especially in light of the ongoing crisis in the euro area and the legacy of an overly ambitious eastward expansion by the banking sector.” This is the main policy advice given to Austria by experts from the International Monetary Fund IMF in Washington D.C. after intensive research on the Austrian economy within the framework of its “Article IV Consultations with Austria”. According to the IMF analysis of the Austrian macroeconomic outlook and challenges, the Austrian economy is set for a gradual revival throughout 2012 and 2013. Against the background of the ongoing financial crisis in the euro area, growth will remain modest this year and next, as a moderate pick-up in domestic consumption will partly be offset by slower external demand. The economic activity will remain somewhat below potential in both years, with unemployment rising slightly from a low level and inflation falling from its peak in 2011.

Further intensification of financial stress in the euro area is the greatest threat to the Austrian economy in the short run. With strong trade and financial ties to the rest of the euro area and a large internationally active banking sector, Austria would have much to lose if efforts to bring the crisis under control faltered.