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Marked Deceleration of Growth Due to Weaker External Environment. Economic Outlook for 2001 and 2002

Author

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  • Markus Marterbauer

    (WIFO)

Abstract

GDP growth in Austria is set to decelerate from 3.2 percent in 2000 to 2.2 on average 2001, mainly on account of less favourable developments in the world economy. In the USA, economic growth has fallen to a virtual standstill, for the whole year it is unlikely to exceed 1 percent. Activity in Europe will be dragged down by weaker foreign trade, while large-scale tax cuts should lend firm support to domestic demand. Growth of GDP is expected at around 2¼ percent. Weaker demand from key trading partners is putting a brake on Austrian export growth and, in the following, on manufacturing output and business investment in machinery and equipment. Domestic demand has lost considerable momentum under the impact of sizeable tax increases. The slower pace of overall growth bears down on the creation of new jobs, and will also inhibit further progress in budgetary consolidation in 2002. The fall in energy prices from last year's peak will dampen the overall rise in consumer prices, the rate of inflation being expected to decline to 1.7 percent.

Suggested Citation

  • Markus Marterbauer, 2001. "Marked Deceleration of Growth Due to Weaker External Environment. Economic Outlook for 2001 and 2002," Austrian Economic Quarterly, WIFO, vol. 6(2), pages 37-46, April.
    • Handle: RePEc:wfo:wquart:y:2001:i:2:p:37-46
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