Austria: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Austria

International Monetary Fund

No 2024/107, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation discusses that economic policy support, including the use of available fiscal space, helped the Austrian economy recover rapidly from the pandemic and cushion the adverse impact of the energy-price shock following Russia’s invasion of Ukraine. Nevertheless, higher energy prices and the increase in interest rates required to contain subsequent inflation have weighed on growth, with the economy contracting last year. Inflation peaked in early 2023 and is now declining, but it remains above the euro-area average, with services sector inflation being relatively high and sticky. Growth is expected to return to positive territory in 2024, led by the recovery in real wages and private consumption. Inflation is expected to decline gradually during 2024–2025 as wage growth moderates and the drop in international energy prices passes through to retail prices, but it will likely be some time before inflation returns to two percent, given its current elevated level and sticky services inflation. Risks are broadly balanced but sizeable and include uncertainties around external demand, energy market developments, inflation persistence, and the depth and speed of real estate market corrections.

Keywords: HICP inflation rate; article IV consultation discussion; gas consumption; gas storage capacities; inflation effect; Inflation; Energy prices; Fiscal stance; Global (search for similar items in EconPapers)
Pages: 62
Date: 2024-05-13
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