A city on a lake in Austria

Austria GDP Q4 2018

Austria: Economy accelerates in 2018 despite softer Q4

According to a preliminary estimate, the Austrian economy grew 0.2% in the fourth quarter over the previous quarter, down noticeably from the 0.4% expansion recorded in the third quarter. Economic growth in the final quarter of last year was supported by both domestic demand and the external sector. Compared to the same quarter a year earlier, economic growth edged up from 2.2% in Q3 to 2.3% in Q4. This brings the growth rate for 2018 as a whole to 2.7%, which is up slightly from 2017’s 2.6% expansion.

On the domestic front, private consumption grew 0.3% in Q4 over the previous quarter and matched the pace of expansion registered in Q3. On the other hand, growth in public consumption halved, from 0.2% to 0.1%. Fixed investment growth also decelerated, growing 0.5% in Q4, down from 0.7% in Q3. The moderation in the pace of expansion came on the tails of weaker investment in equipment and the construction sector.

On the external front, exports of goods and services decelerated somewhat from Q3’s 0.6% expansion to 0.4% in Q4, likely linked to the broader loss of economic momentum in Europe as the Austrian economy is heavily orientated to the region. Nevertheless, the external sector contributed positively to economic growth as import growth also eased from 0.4% to 0.3% in the same period.

Looking ahead, the Austrian economy is expected to continue growing at a robust, albeit more moderate, clip in line with moderating momentum across Europe. Domestic demand should remain robust in part on the back of a looser fiscal stance from the government and a tightening labor market, which should drive up wages and buttress private consumption. Downside risks stem from the external front as a hard or disorderly Brexit, a prolonged Italian recession and lingering global trade tensions could all weigh on the European economy and thus affect Austria’s export momentum.

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