Austria: Economy slows in fourth quarter
February 14, 2011
In the fourth quarter, GDP increased a seasonally and working day adjusted 0.6% over the previous quarter, according to a preliminary estimate released by the Austrian Institute of Economic Research (WIFO) on 14 February. The reading was below the 0.9% expansion registered in the third quarter and was exactly in line with last month's Consensus Forecast. Compared to the same quarter the year before, GDP grew 2.4% in Q4, which was a notch below Q3's 2.5% expansion. The deceleration over the previous quarter was mainly the result of sluggish domestic demand. Both private consumption (Q4: +0.3 quarter-on-quarter) and government consumption (Q4: +0.1 qoq) grew at the same pace as in the third quarter. In contrast, gross capital formation decelerated over the previous quarter (Q4: +1.2% qoq; Q3: +2.8% qoq), on the back of a downward shift in inventories. However, the net contribution from the external sector to overall growth improved over the previous quarter, as exports of goods and services decelerated less than imports. Exports expanded 1.4%, below the 2.9% increase in the third quarter, while imports grew only 0.8%, well under the 2.9% expansion observed in Q3. As a result, the net contribution from the external sector to overall economic growth improved from a 0.2 percentage-point contribution in the third quarter to a 0.4 percentage-point contribution in the fourth. At the sector level, the fourth quarter reading reflected a slowdown in industrial production as well as in commerce, transportation and communication. In contrast, construction contracted at the same pace as in the previous quarter (Q4:-0.9% qoq). Based on quarterly data, the economy grew 1.8% for the full year 2010, which contrasted the 3.9% contraction registered in 2009. The Austrian Institute of Economic Research (WIFO) expects GDP growth to accelerate to 2.2% this year before slowing to 2.0% in 2012. Moreover, in its December economic outlook report, the Central Bank sees economic activity rising 2.1% this year. For 2012, monetary authorities see the economy expanding 2.3%.
Author: Ricardo Aceves, Senior Economist