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Strong Cyclical Upswing Leaves Budgetary Problems Unresolved. Economic Outlook for 2000 and 2001

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  • Markus Marterbauer

    (WIFO)

Abstract

Growth of the Austrian economy in 2000 is projected at 3.1 percent in volume. Activity is being driven both by booming exports and lively domestic demand. Fiscal policy will still have a moderately expansionary effect, while turning more restrictive next year, when measures aiming at sustained budgetary consolidation will take effect. Demand and output in 2001 may thus advance at a somewhat slower pace (+2.7 percent). In both years, net government borrowing would, on present assumptions, amount to 2 percent of GDP. The increase in indirect taxes and public charges will add to inflation, projected for the consumer price level at annual rates of 1.6 (2000) and 1.4 percent (2001). The favourable business cycle conditions should lead to a further improvement on the labour market. Employment is set to rise substantially, by around 35,000 in each year. As for the further trend in unemployment, much will depend on how much money will be made available for labour market policy measures and on the design of the envisaged reform of the social retirement system.

Suggested Citation

  • Markus Marterbauer, 2000. "Strong Cyclical Upswing Leaves Budgetary Problems Unresolved. Economic Outlook for 2000 and 2001," Austrian Economic Quarterly, WIFO, vol. 5(2), pages 55-64, May.
    • Handle: RePEc:wfo:wquart:y:2000:i:2:p:55-64
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