Austria: Private consumption keeps economic growth afloat in Q3
October 29, 2021
Economic growth remained robust in the third quarter, despite cooling somewhat, with GDP expanding 3.3% in quarter-on-quarter terms (Q2: +4.0% qoq). Compared to the same period a year prior, the economy grew 4.8% in the third quarter, notably down from the 12.6% expansion logged in the second.
The further lifting of restrictive measures in the quarter buoyed private consumption, which solely carried the economy. Household spending jumped to an 8.2% quarterly expansion, up from the prior quarter’s 1.9% increase, also supported by a tighter labor market and less downbeat sentiment. Meanwhile, government consumption fell 1.0% in Q3, after expanding 3.0% in Q2. Fixed investment also contracted in the period, dropping 0.4% and contrasting the second quarter’s 1.5% expansion.
On the external front, exports of goods and services dropped 4.1% in the quarter, swinging markedly from the 13.7% expansion logged in the second quarter. Meanwhile, imports of goods and services fell 5.0% in Q3, after expanding 3.7% in the second quarter.
A second GDP estimate based on more complete data will be released at the end of November.
Turning to the fourth quarter, activity is likely to be held back by ongoing supply-side constraints, higher energy prices and rising inflation. Looking beyond the short term, the Austrian economy is expected to grow at a slightly stronger pace in 2022, despite a less favorable effect. Domestic demand should firm amid normalizing economic conditions, while fading supply-side issues should boost the industrial sector and goods exports.
Author: Jan Lammersen, Economist