Economic Outlook Improves in Euro Area – Inflation Pressure Persists Due to High Energy Prices

Andreas Breitenfellner, Gerhard Fenz () and Thomas Reininger ()
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Gerhard Fenz: Oesterreichische Nationalbank, Economic Analysis Divison, http://www.oenb.at
Thomas Reininger: Oesterreichische Nationalbank, Foreign Research Division, http://www.oenb.at

Monetary Policy & the Economy, 2006, issue 1, 6–23

Abstract: The world economy is chugging along, but its key engines may be changing. While the economies of the U.S.A. and China have reached more mature levels, economic activity is now gradually gaining momentum in Europe and Japan. In Austria, economic growth over the year 2005 clearly regained momentum after a substantial but temporary slowdown in late 2004 and early 2005.Whereas previously economic growth was mainly driven by exports, it is now increasingly supported by domestic demand, too. Already in the second half of 2005, Austrian businesses visibly stepped up their investment activities, while recovery in consumer spending has been more hesitant. According to the OeNB's economic indicator, growth in Austria's real GDP (seasonally adjusted, compared to the previous quarter) will jump to 0.8% in both the first and second quarters of 2006. Despite high energy prices, inflation has abated considerably, thus supporting the real purchasing power of households. Finally, employment has risen, but the rate of unemployment remains elevated nonetheless.

Keywords: economic developments; global outlook; euro area; central and (south-)eastern Europe; Austria (search for similar items in EconPapers)
JEL-codes: E20 E30 O10 (search for similar items in EconPapers)
Date: 2006
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