The weakness of domestic demand in Austria and in major trading partner countries is shaping current economic developments. Hopes for a pick-up of activity are based upon a speedier recovery in the USA which is, however, subject to considerable risks. In Austria, equipment investment and imports are receding, and industrial output is slightly below the year-earlier level. Retail sales are almost flat, while exports are rising moderately and a tentative recovery of construction activity has become visible in civil engineering. The adverse trend in overall demand is mirrored by a marked decline in employment, higher unemployment and a fall in tax revenues.