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Update of the Medium-term Forecast for the Austrian Economy from 2016 to 2020

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  • Josef Baumgartner
  • Serguei Kaniovski

Abstract

Following a period of sluggish growth averaging ½ percent p.a. from 2012 to 2015, economic activity in Austria is expected to pick up over the medium term, averaging at a moderate pace of +1½ percent p.a. between 2016 and 2020. Foreign trade, government consumption and investment spending will contribute less to economic growth than prior to the financial market crisis and the recession 2008-09. Growth of private consumption should pick up from 0.5 percent p.a. 2011-2015 to 1.4 percent p.a. over the forecast period, receiving stimulus from higher disposable income due to the tax reform 2015-16, and from additional demand due to refugee immigration. While the moderate GDP growth will allow employment to increase by 1.1 percent p.a. from 2016 to 2020, the creation of new jobs will not prevent unemployment from rising further until 2018, since labour supply, both domestic and from abroad (driven also by the inflow of refugees), will outpace demand. The rate of unemployment may reach almost 10 percent (national definition) by 2017 and change little thereafter. Inflationary pressure will remain moderate over the medium term, at an annual rate of 1.7 percent. The inflation rate will be thus higher than the average in the euro area, making for somewhat smaller real income gains in Austria. Given the projected cyclical profile and the assumptions on the economic policy settings, a balanced general government budget, whether in nominal (Maastricht definition) or structural terms, may be difficult to achieve over the forecast horizon.

Suggested Citation

  • Josef Baumgartner & Serguei Kaniovski, 2016. "Update of the Medium-term Forecast for the Austrian Economy from 2016 to 2020," WIFO Bulletin, WIFO, vol. 21(6), pages 58-64, June.
    • Handle: RePEc:wfo:wblltn:y:2016:i:6:p:58-64
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    References listed on IDEAS

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    1. Stefan Schiman-Vukan, 2015. "Confidence in the USA, Uncertainty in the Euro Area, Fragility in the Emerging Markets. Medium-term Forecast for the World Economy until 2020," WIFO Bulletin, WIFO, vol. 20(19), pages 214-221, November.
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    6. Josef Baumgartner & Serguei Kaniovski, 2015. "Steuerreform 2015/16 – Gesamtwirtschaftliche Wirkungen bis 2019," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(5), pages 399-416, May.
    7. Josef Baumgartner & Serguei Kaniovski & Hans Pitlik & Margit Schratzenstaller-Altzinger, 2015. "Moderate Growth with High Unemployment. Medium-term Forecast for the Austrian Economy until 2020," WIFO Bulletin, WIFO, vol. 20(27), pages 303-319, December.
    8. Josef Baumgartner & Serguei Kaniovski, 2015. "The Tax Reform 2015-16 – Macroeconomic Effects up to 2019," WIFO Bulletin, WIFO, vol. 20(22), pages 250-265, December.
    9. Josef Baumgartner & Serguei Kaniovski & Hans Pitlik & Margit Schratzenstaller-Altzinger, 2015. "Mäßiges Wirtschaftswachstum mit hoher Arbeitslosigkeit. Mittelfristige Prognose der österreichischen Wirtschaft bis 2020," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(10), pages 779-796, October.
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