Austria: GDP records best result since Q1 2024 in Q4
Economy stabilizes in Q4: According to a preliminary estimate, the economy stagnated on a seasonally adjusted quarter-on-quarter basis in the fourth quarter, improving from the 0.1% contraction tallied in the third quarter and marking the best result since Q1. On an annual basis, the economy shrank at a milder pace than in Q3, logging a 0.2% contraction in Q4 (Q3: -0.8% yoy). That said, in 2024 as a whole, annual GDP contracted by 1.0%, below 2023’s 0.8% decline.
Healthier private consumption offsets weaker exports: Domestically, household spending rebounded, growing 0.3% on a seasonally adjusted quarter-on-quarter basis in Q4 (Q3: -0.2% qoq s.a.). Moreover, fixed investment growth hit an over two-year high of 0.5% in the fourth quarter (Q3: +0.4% qoq s.a.), likely bolstered by ECB rate cuts. That said, government consumption dropped at the sharpest pace since Q3 2023, contracting 0.2% (Q3: +0.6% qoq s.a.), reflecting political instability.
On the external front, exports of goods and services contracted 1.6% in Q4, marking the worst reading since Q3 2023 (Q3: -0.6% qoq s.a.), as German economic activity remained subdued. In addition, imports of goods and services swung into contraction, falling 1.2% in Q4 (Q3: +1.1% qoq s.a.).
Economy to rebound in 2025: In the coming quarters, economic activity is expected to return to growth, likely boosted by healthier private consumption buoyed by lower interest rates. In 2025 as a whole, our panelists expect the economy to exit its two-year-long recession. A favorable base effect, ECB rate cuts and stronger EU demand will drive rebounds in private spending, fixed investment and exports, respectively. That said, public spending will decelerate as the government adopts a more austere fiscal stance. Longer-than-expected political instability is a downside risk.
Panelist insight: Commenting on the risks to the outlook, EIU analysts stated:
“Austria’s growth outlook is reliant on Germany’s industrial performance. This is due to the two countries’ closely integrated industrial sectors, whereby a poor German industrial performance means that Austria’s manufacturing exports are impacted. This will remain a challenge in 2025, especially given US trade policy. Following Mr Trump’s victory in the US presidential election in November, we expect his administration to levy new blanket tariffs of between 5% and 10% on imports from the EU, which would weigh on Austria’s growth.”