Austria Economic Outlook
According to a flash estimate, the economy entered a recession with a 0.6% contraction in seasonally adjusted quarter on quarter terms in Q3 (Q2: -0.8%). Total consumption fell more compared to the preceding quarter, while fixed investment declined at a slower pace, and exports of goods and services rebounded. In Q4, the economy is expected to show muted growth. The manufacturing PMI remained firmly in negative territory in October despite slightly improving from Q3’s average. Furthermore, weak consumer sentiment, higher interest rates and persistent inflation likely hurt private spending. In other news, the metal and manufacturing industries started a three-day strike on 6 November following failed collective bargaining negotiations in the preceding week. If no agreement is reached, further strikes are likely to follow.
Harmonized inflation fell to 4.9% in October (September: 5.7%) on softer housing and utilities price growth. Inflation is set to fall by Q4 2024 from current levels on past ECB rate hikes and lower commodity prices. Potential energy market disruptions, especially considering the country’s reliance on Russian gas, are an upside risk.