Economy Grew by 0.4 percent in the First Quarter of 2019

29.05.2019

Strong Impulses from the Construction Sector

According to the recent WIFO Quarterly National Accounts, GDP in Austria grew by 0.4 percent in the first quarter of 2019 compared to the previous quarter (fourth quarter of 2018 as well 0.4 percent). Moderate economic development continued. Consumption and investment demand were strong. Notably, investment in construction increased considerably. By contrast, the export-driven industrial economy weakened from mid-2018 onwards.

Austrian GDP grew by 0.4 percent in the first quarter of 2019 compared to the previous period (trend-cycle component). Compared to the previous year, unadjusted GDP grew by 1.4 percent in the first quarter. As already indicated in the WIFO Flash Estimates from the end of April, economic momentum was moderate in the first quarter, whereas actual results show a slight upward revision compared to the flash estimates (+0.1 percentage point in quarter-on-quarter comparison, +0.3 percentage points in year-on-year comparison).

The seasonally and working-day adjusted GDP growth (indicator according to Eurostat standard) was also 0.4 percent in the first quarter (+0.1 percentage point compared to the flash estimates). Thus, growth in the first quarter in Austria was similarly high as that published by Eurostat mid of May for the euro area (0.4 percent) and the EU 28 (0.5 percent).

Domestic demand again proved to be a stable pillar of growth for the Austrian economy in the first quarter. Both private consumption expenditure (including non-profit institutions serving households) and public consumption expenditure expanded by 0.4 percent.

Similarly, gross fixed capital formation (investment in machinery and equipment, weapon systems and in construction) grew robust by 0.8 percent in the first quarter of 2019. While the pace of capital spending on equipment slowed from the second half of 2018 onwards (first quarter of 2019 +0.6 percent, after average 1.2 percent in the first half of 2018), investment in construction continued to expand strongly (first quarter of 2019 +0.8 percent, after average 0.9 percent in the first half of 2018). Investment in transport equipment showed a declining trend. Demand for machinery and electrical appliances, on the other hand, was sound in the first quarter of 2019.

On the background of the robust international development, Austrian export grew by 0.6 percent. Exports of goods increased by 0.4 percent, slightly stronger than expected in the flash estimates at the end of April. However, the picture of a declining demand since the mid of 2018 was confirmed here. Import demand grew by 0.4 percent in the first quarter, those of goods by 0.6 percent.

In industry, too, economic momentum has recently continued to slow. Value added in manufacturing stagnated (fourth quarter of 2018 +0.1 percent). However, the boom in the construction industry continued (+0.6 percent after +0.7 percent in the fourth quarter of 2018). The service sector also supported economic growth. Value added in the retail sector increased by 0.1 percent, in the accommodation and food service activities by 1.2 percent. In the sector of professional, scientific, technical and administrative and support service activities increased by 0.5 percent.
 

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Jürgen Bierbaumer-Polly

Research groups: Macroeconomics and European Economic Policy

Sandra Bilek-Steindl

Research groups: Macroeconomics and European Economic Policy
© James Sullivan/Unsplash
© James Sullivan/Unsplash