The Coronavirus Pandemic Impacts the Austrian Economy

WIFO-Konjunkturtest of March 2020
The results of the WIFO-Konjunkturtest (business cycle survey) of March 2020 already reflect the first effects of the coronavirus pandemic on the Austrian economy. Although many companies already answered the survey at the beginning of March, the reports show a significant deterioration of the economic assessment. The decline mainly affected expectations for the upcoming months.

The index of the current assessments of the overall economy fell by 3.4 points in March (excluding seasonal fluctuations) to 9.2 points. The decline is due to the services sector, especially tourism and catering. In the services sector, the index falls by 5.2 points, but remains in positive territory at 8.8 points. In the construction industry, the index falls only slightly, as in the manufacturing sector.

The greatest declines are recorded in expectations. The index of business expectations clearly lost momentum in March (–11.4 points) and fell into negative territory (–3.4 points). Only in the construction sector the expectations index remains comparatively stable. In the other sectors, the expectations indices fall considerably. In the manufacturing sector, the index of business expectations is at levels last reached in the financial crisis of 2008-09. Due to the corona pandemic, the development of the index of business expectations points to a broad-based deep economic slump in Austria.

Despite the declines, these results do not reflect the situation at the end of March. Most questionnaires were answered at the beginning of March, when the extent of the corona pandemic was still difficult to assess. A special analysis, which distinguishes between reports received at the beginning of March and mid-March, shows much more significant declines for mid-March, especially for tourism. The same is true for services and manufacturing. The analysed indicators also show a worsening of business sentiment in the construction sector. This shows that the results of the WIFO-Konjunkturtest that are now available must be interpreted with caution, as they partly reflect the still comparatively optimistic assessments and expectations of Austrian companies at the beginning of March compared to the current situation.

Details on all sectors in the current economic survey can be found here.

Dr. Werner Hölzl
Industrial, Innovation and International Economics