Austria: Economy rebounds in the first quarter
According to a preliminary estimate, the Austrian economy gained steam in the first three months of 2024, expanding 0.2% on a seasonally adjusted quarter-on-quarter basis. The upturn came in above the flat growth recorded in the fourth quarter of last year and was the strongest since Q2 2022; that said, growth was below the Euro area average.
Meanwhile, GDP contracted 1.3% year on year in Q1, improving slightly from Q4 2023’s 1.4% downturn, marking the smallest decrease since Q1 2023.
The quarterly improvement chiefly reflected a sharp rebound in private consumption, which grew 1.3% on a seasonally adjusted quarter-on-quarter basis in Q1 (Q4 2023: -0.2% s.a. qoq) and marked the best reading since Q1 2022; nine-quarter low inflation and a declining unemployment rate supported household budgets at the outset of 2024. Moreover, government spending dropped at a milder rate of 1.2% in Q1 (Q4 2023: -1.4% s.a. qoq). That said, fixed investment contracted 2.7% in Q1, contrasting the prior quarter’s 0.9% expansion and marking the worst result since Q2 2020.
On the external front, exports of goods and services swung into a 0.3% contraction in Q1 (Q4 2023: +3.9% s.a. qoq). Similarly, imports of goods and services fell 1.5% in Q1, deteriorating from the previous quarter’s 3.5% increase and marking the worst reading since Q2 2020.
Our Consensus is for sequential growth to accelerate in Q2 and for the economy to rebound in 2024 as a whole from 2023’s contraction—the worst in 14 years barring 2020’s pandemic-induced downturn. Receding price pressures, election-related public spending and a looser monetary policy backdrop in the second half of the year will underpin a recovery in domestic demand. Faster growth in exports of goods and services will further add impetus.