The most severe economic crisis since World War II will lead to a fall in demand and output in Austria by 3.4 percent in real terms this year. Policy action taken at home and abroad to stem the recession are increasingly having a stabilising effect. As a consequence, GDP in Austria will head up again in the second half of the year, though growth will remain at a modest 1 percent in 2010. Job losses will continue into next year, accompanied by a further rise in unemployment. Inflation is set to stay low over the projection period even if commodity prices will exert upward pressure on prices. The general government deficit will widen to 4.5 percent of GDP in 2009 and somewhat further in 2010.