Austria: Economy expands moderately in Q4 2019
In the final quarter of last year, the economy gained traction and expanded 0.3% quarter-on-quarter in seasonally-adjusted terms. The print tripled the meager reading of 0.1% quarter-on-quarter growth recorded in the third quarter. On the other hand, annual growth slumped to 1.1% from 1.6% in Q3. Over 2019 as a whole, the economy grew at a four-year low of 1.6% (2018: +2.4% year-on-year).
Domestic demand strengthened in the fourth quarter. Government consumption increased 0.4%, up from the prior quarter’s 0.3% expansion, while fixed investment rose 0.5% (Q3: +0.3% quarter-on-quarter). Meanwhile, private consumption growth was steady at 0.3%, likely reflecting a tightening of the labor market and mild inflationary pressures.
Meanwhile, the external sector contributed negatively to growth, reflective of weak global trade amid lingering trade tensions. In the final quarter of last year, exports of goods and services grew at the joint-slowest pace since the first quarter of 2013 (Q4: +0.3% qoq; Q3: +0.3% qoq), while imports increased 0.3% quarter-on-quarter (Q3: +0.5% qoq).
Inga Fechner, economist at ING, commented that: “Still, the Alpine republic performed relatively well over the course of the year compared to its eurozone peers, also benefiting from its close ties to the CESEE economies, which helped to offset the struggling German manufacturing sector.”
This year, the Austrian economy will likely cool further on the back of easing domestic demand due to waning investment outlays. Moreover, the external sector will likely continue feeling the pinch from lingering external headwinds related to Brexit uncertainty, as well from tense Sino-American and U.S.-EU trade relations. However, solid private consumption should support activity.