According to the recent WIFO investment survey, which samples some 900 firms of the manufacturing sector, the construction sector and the energy sector as well as public transport enterprises and public utilities in Austria, investment spending will decrease by 6.4 percent in nominal terms in 2002. In real terms, aggregate investment in Austria is forecast to fall by 0.7 percent. Overall growth of the domestic economy is now gradually recovering from the downturn in 2001. The fragile development of the international economy, however, makes the uncertainty surrounding an economic upturn before the end of 2002 greater than assumed at the beginning of the year 2001. The latest business survey of the European Union supports the view that a slow recovery is under way. Although the composite index of the manufacturing sector increased during the first month of 2002, a decline was recorded in May 2002. The construction and retail trade sectors have reported pessimistic expectations since the beginning of 2002, with no sign of improvement. Due the weak growth prospects aggregate investment is forecast to decrease by 0.7 percent in real terms. Overcapacity and weak demand motivated companies to postpone investment projects. For 2003, WIFO expects a stabilisation of business expectations and a pronounced increase in aggregate investment (+3.9 percent). The enterprises of the manufacturing sector plan to reduce their investment spending substantially (-7.3 percent) in nominal terms, driving the investment/sales ratio down to 5.7 percent. The firms included in the Survey primarily cut investment in buildings and in electronic equipment. Immaterial investment in R&D as well as in marketing activities are also affected by the weak growth performance. For 2001, the average R&D to sales ratio amounted to 2.8 percent, a reduction by 0.7 percentage points as compared to 2000. Investment spending differs widely across manufacturing sectors. Companies in the motor vehicles industry and in the non-durable consumer goods sector plan to increase their capital outlays. The producers of intermediate goods, investment goods, and durable consumer goods report reductions in planned investment. The construction sector has been heavily affected by the downturn in 2001 and there is no sign of a recovery in 2002. WIFO expects an output decline; as a consequence, investment will be weak in 2002. Specifically, reports by enterprises active in building construction indicate a reduction in investment expenditures. Production growth and investment spending will be much stronger in civil engineering as a result of large projects for building up and improving the infrastructure (e.g., tunnels for train networks and motor highways). In the electricity industry the downsizing in the course of the liberalisation process is levelling off in 2002. After several years of massive reductions in capital outlays, the survey results point to a small investment increase in 2002 (+1.1 percent). Transport firms and public utilities report a reduction by 10.7 percent.