On major export markets, demand for Austrian manufactures nevertheless proves resilient (USA, CEEC). The temporary setback in German motor car production and its repercussions on Austrian suppliers are gradually subsiding, and the USA-China trade conflict has eased. Moreover, continued solid demand for services helps sustain overall economic activity.
From a dynamic upturn, Austria's output cycle reached a peak in mid-2018, with industrial production now heading down. Going forward, optimistic and pessimistic expectations by manufacturers broadly balance out, while those of construction firms and service providers are more upbeat. Already in 2018, many firms curbed investment, stockbuilding and imports. During the second half of 2019, the downward trend should ebb, with adverse factors becoming partly offset and policy worldwide taking counter-cyclical action.
Sluggish global trade and weakening industrial production in Germany currently dampen exports and domestic manufacturing output
growth. The adverse impact from world trade is limited, however, by the fact that it largely results from the bilateral USA-China
conflict. The production shortfall in the German motor car industry that had been triggered by the backlog in certification
procedures in autumn 2018, had negative repercussions for domestic suppliers of components; the latter account for about one-seventh
of total goods exports to Germany. Other branches have been less affected and part of the losses on the German market will
be recuperated. Though slackening during 2019, exports will still provide a positive contribution to GDP growth, notably thanks
to robust demand from the USA for capital goods and buoyant activity in Central eastern Europe.