Domestic Demand to Recover Gradually over the Medium Term. Projections for the Austrian Economy until 2009

Serguei Kaniovski, Markus Marterbauer and Josef Baumgartner

Austrian Economic Quarterly, 2005, vol. 10, issue 3, 114-126

Abstract: Growth of the Austrian economy may accelerate to an annual rate of 2.3 percent in the next five years. The average rate would thereby be markedly higher than the 1.6 percent recorded over the period from 1999 to 2004. Activity is receiving substantial stimulus from exports. Austrian firms should benefit from lively world trade, given their high price competitiveness. A crucial requirement for growth moving to a higher pace is that the weakness of both consumer demand and construction investment can be overcome. In spite of the cyclical recovery, no turnaround is in sight on the labour market. The strong increase in labour supply will keep unemployment on an upward trend until 2009. Inflation will remain subdued. On the assumption of a steady pace of economic growth and a restrictive stance on government expenditure, the general government deficit will recede to around ½ percent of GDP by 2009.

Date: 2005
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