The Austrian economy registered its strongest growth in six years in the first quarter of 2017. Private consumption remained a solid pillar of economy activity, while exports benefitted from strong impetus provided by emerging market economies, especially via the tight supply chains with Germany, and by East Central Europe. Unemployment declined as a result of the upswing that set in with the tax reform implemented in 2016, with strong second-round effects creating additional demand; consumer sentiment again caught up with that in Germany. Nevertheless, the labour market is faced with structural problems. The massive increase in labour supply brought about by opening the labour market for citizens from Eastern countries, the ageing of the labour force, and the implementation of pension reform measures contributed to an entrenchment of unemployment.