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Austrian Economy Affected by Global Economic Downturn

Austrian Economy ©


December 1, 2008

Early Recovery Expected As Industrial Sector Makes Comeback

Austria 's economy, whose strong export orientation make it particularly susceptible to international developments, is increasingly affected by the global economic downturn. According to a Bank Austria sponsored survey among purchasing managers, Austria 's industrial output has been contracting in the second half of 2008. The bank’s economists believe that the length and severity of a recession experienced by the overall Austrian economy will depend on the development of the industrial sector. The disappointing figures for the last months of 2008 nourish the fear that the Austrian economy will enter into recession in the first half of 2009.

The slowdown of the global economy, amplified by the global financial crisis, has unnerved economic players, a temporary situation which is reflected in an exceptionally defensive market. Given the current globally weak demand, Austrian manufacturers are faced with even tougher competition, forcing them to further lower sales prices. As a result, profit margins will shrink in the next few months.

The economists predict that the Austrian industrial output will contract significantly in 2009 after growing by about 1% in 2008. The second half of 2009 may offer possibilities for a slow recovery with high output levels. Due to structural renewal measures of past years and relatively moderate wage agreements, Austria has no structural imbalances and will not experience a deep recession or depression. Economic growth of 1.9% in 2008 will however shrink to 0.1% next year. Austria 's industry is well-placed to benefit early on from a global upward trend.