Interest Rate Hikes As International Risk
Recent data underline the favourable business cycle situation in Austria. Demand is growing strongly, particularly among the domestic components and the capital spending spree provides new production capacities thereby preventing overall bottlenecks. The relative calm on the price front and the high elasticity of labour supply confirm the absence of excessive demand pressures, the current account is in equilibrium. Yet, foreign developments now carry somewhat higher risks. Foreign orders in industry are slackening, interest rates abroad are rising at a faster pace and the real effective Schilling exchange rate has resumed its upward trend.