Austria Economic Outlook
Quarter-on-quarter GDP growth was flat in Q4, as reductions in private consumption and exports of goods and services were offset by increases in public consumption and investment. The economy appeared to contract in quarterly terms in Q1, dragged down by weaker activity in the trade, transport, and hospitality sectors, which was likely only partly offset by improving industrial and construction activity. Data for the second quarter is limited, although an uptick in business sentiment in April and an expected decline in price pressures during the quarter bode well for activity. In other news, the European Commission disbursed the first payment of 700 million under the Recovery and Resilience facility on 20 April following the fulfillment of EU targets.
Harmonized inflation fell to 9.2% in March from 11.0% in February due to lower price pressures for food, housing and transport. Inflation will decline in H2 but is set to remain above the ECB’s 2.0% target as a result of wage increases and pass-through effects. The speed at which commodity price changes are passed on to consumer prices is a factor to watch.