Economic Outlook for 2008 and 2009: Growth Slowing Down

  • Markus Marterbauer

GDP growth in Austria is set to abate from 3.4 percent in 2007 to 2.2 percent in 2008. A first preview to 2009 suggests a rate of growth around 2 percent. Main reason for the deceleration is a weakening of the international environment, as witnessed by the cyclical downturn in the USA, the crisis on financial markets and the appreciation of the euro. In Austria, too, investment growth is losing momentum, and the support to activity from private consumption will be constrained by the meagre gains in real incomes. The latter are squeezed also by a marked rise in inflation, projected at an annual 2.6 percent for 2008. The slowdown of growth will keep the rate of unemployment at 6¼ percent of the labour force (4¼ percent on Eurostat definitions).