Austria: Economy emerges from recession in Q2
September 2, 2021
A second release of national accounts data revealed that the economy grew 3.6% on a seasonally-adjusted quarter-on-quarter basis in the second quarter. This was down from the initial estimate of a 4.3% expansion, but still marked a rebound from the first quarter’s 0.2% contraction. On an annual basis, the economy grew 12.0% in the quarter (Q1: -4.8% yoy), marking the best result since current records began in 1996.
On the domestic front, the quarterly upturn was driven by stronger consumption. Household spending jumped 3.3% over the prior quarter in Q2 (Q1: -1.6% s.a. qoq), buoyed by the gradual relaxation of lockdown measures from 19 May. Moreover, growth in public consumption sped up to 2.9% quarter-on-quarter (Q1: +1.2% s.a. qoq). On the other hand, fixed investment growth decelerated to 1.8% in the second quarter from 4.7% in Q1.
On the external front, exports of goods and services rose 6.7% over the prior quarter in Q2. This followed a 2.5% contraction in the first quarter and came on the back of looser travel restrictions abroad and the reopening of hotels and restaurants, buoying inbound tourism. Imports of goods and services, meanwhile, swung to a 2.1% contraction in the second quarter from a 2.4% increase in Q1. All in all, the external sector contributed positively to economic growth in the second quarter.
The economy is expected to grow at a somewhat milder pace in the second half of the year, in part due to a less favorable base effect. The easing of movement restrictions will continue to boost household spending and more upbeat business confidence should keep fixed investment solid. Softer lockdown measures abroad are expected to buoy the tourism sector and external trade. However, the balance of risks is tilted to the downside. The spread of more infectious strains of Covid-19 and a recent uptick in new daily cases could cause restrictions to be tightened down the line. Moreover, the gradual rollback of fiscal measures and a still-elevated unemployment rate will likely cap household spending growth.
Author: Jan Lammersen, Economist