Austria is in its Third Year of Recession

The decline in industrial production in the euro area, which has been observed since the beginning of 2023, continues to affect Austria. Surveys among manufacturing companies do not yet point to a turnaround. The announced increase in tariffs of the USA on EU export goods is also weighing on sentiment. By contrast, construction and consumer demand are expected to trend upwards. Inflation rose significantly at the beginning of 2025 but is forecasted to fall back in the course of the year. The labour market is proving relatively resilient given the duration and severity of the recession, although unemployment will continue to rise in 2025. WIFO expects GDP to fall by 0.3 percent in 2025. The Austrian economy will pick up momentum again in 2026 (+1.2 percent).