Modest economic downturn in Austria on the back of a slowing global economy

Gerhard Fenz (), Friedrich Fritzer (), Ernst Glatzer () and Martin Schneider ()
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Gerhard Fenz: Oesterreichische Nationalbank, Economic Analysis Divison, http://www.oenb.at
Friedrich Fritzer: Oesterreichische Nationalbank, Economic Analysis Division, http://www.oenb.at
Ernst Glatzer: Oesterreichische Nationalbank, http://www.oenb.at
Martin Schneider: Oesterreichische Nationalbank, Economic Analysis Divison, http://www.oenb.at

Monetary Policy & the Economy, 2019, issue 19/Q3, 12-24

Abstract: Amid weakening global growth, economic activity in Austria has also been slowing down, albeit only moderately thanks to robust domestic demand. Based on the results of its Economic Indicator, the Oesterreichische Nationalbank (OeNB) expects real GDP to expand (quarter on quarter) by 0.2% in the third quarter and by 0.3% in the fourth quarter of 2019. This implies a downward revision of 0.2 percentage points from the OeNB’s Economic Indicator of May 2019. Real GDP is, however, still expected to grow by 1.5% in 2019 as a whole, as real GDP data for the beginning of 2019 have been revised slightly upward. In its most recent inflation forecast of September 2019, the OeNB anticipates HICP inflation to decline from 2.1% in 2018 to 1.6% in 2019, and to remain at this level in both 2020 and 2021. Compared with the OeNB’s June 2019 outlook, this represents downward revisions of 0.1 percentage points for each of the years from 2019 to 2021. In 2019, the decline in inflation has been driven by lower energy price inflation, which is masking persistently high wage pressures and robust domestic demand, both of which are not expected to decrease before 2020. As a result, core inflation (excluding food and energy) is projected to reach 1.8% in 2019 and 2.0% in 2020, before dropping to 1.7% in 2021, given the cyclical downturn in Austria.

Date: 2019
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