A city on a lake in Austria

Austria GDP Q2 2022

Austria: Economic growth cools in Q2

Austria’s economy expanded 0.5% quarter on quarter in Q2, down from the 1.5% expansion logged in the first quarter. The slowdown was even more pronounced on an annual basis, with the economy growing 4.7% over the same period a year prior in Q2. This was down from the 8.7% increase recorded in the first quarter.

The quarterly slowdown was primarily driven by a contraction in household spending (Q2: -1.9% qoq; Q1: +0.8% qoq). Household spending declined on the back of greater price pressures in the period due to the fallout from the war in Ukraine, which saw commodity prices spike. The conflict also weighed on business confidence, which moderated notably in the period—Business sentiment fell into pessimistic territory in May–June. In turn, fixed investment growth eased to 1.2% in the second quarter, from 1.6% in the first. Meanwhile, government consumption growth flatlined.

On the external front, the war seemingly did not leave its mark yet despite Austria’s reliance on Germany. Exports of goods and services grew at a stronger 2.7% pace in the second quarter, up from the first quarter’s 2.3%. Imports of goods and services growth, meanwhile, moderated from 3.7% in the first quarter to 0.5% in the second.

Turning to the third quarter, the war on Europe’s eastern flank is set to continue dampening household spending momentum, as commodity prices remain elevated, fueling inflation. Moreover, the country’s industrial sector is highly export-orientated and geared towards Germany. International sanctions, supply chain problems, softer demand from Germany and other European markets, as well as high commodity prices, will weigh on the industrial sector. More positively, a tighter labor market and the government’s third fiscal relief package (announced in mid-June) should provide some respite for the economy, although the balance of risks is clearly skewed to the downside.

Margarita Grushanina, analyst at Erste Bank, commented:

“The current enormous global uncertainty and the clearly downward-pointing risks speak for cautiousness in estimating the economic development in the coming quarters. For 2022 as a whole, we expect GDP growth of 3.8%. For 2023, we expect a slowdown to 1.8%, due to spillovers from the war in Ukraine and the adverse effects of high inflation.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest