Austria Economic Forecast

Austria Economic Outlook

January 30, 2018

Leading indicators suggest that the strong momentum in the Austrian economy likely carried over from Q3 into Q4. The expansion in the third quarter was primarily driven by the external and the manufacturing sectors, and these two sectors seemingly continued their robust performance in the final quarter of the year. In October, exports grew nearly 20% in annual terms, while the manufacturing PMI averaged higher in Q4 than in Q3; the manufacturing PMI hit the highest result in the history of the survey in December on the back of strong growth in new domestic and foreign orders. Moreover, consumer confidence levels rose strongly in December to record the best result in nearly a decade. Business sentiment followed suit, clocking a multi-decade high in the same month. Both sentiment indicators were driven higher by the bright economic outlook for 2018.

Austria Economic Growth

Economic growth this year should be aided by a tightening labor market as firms continue to hire more staff, which will support private consumption. Household spending is further expected to benefit from the government’s fiscal stimulus and pro-growth plans. Income tax reductions should lead to higher disposable incomes, while corporate tax modifications would increase profitability. There will, however, be a limit to Austria’s room to maneuver, as it needs to comply with EU fiscal rules and has limited fiscal space. FocusEconomics panelists see the economy expanding 2.4% in 2018, which is up 0.1 percentage points from last month’s estimate, and 1.9% in 2019.

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Austria Facts

Bond Yield0.970.40 %Feb 19
Exchange Rate1.240.65 %Feb 19
Stock Market3,409-1.00 %Feb 19

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