The Outlook for 1989 and 1990: Buoyant Investment

The Austrian economy is now expected to grow by 3.5 percent in 1989 again exceeding the Western European average. High investment and gains in export market shares are mainly responsible for the upward revision of the forecast. In 1990, real GDP growth is likely to slow to 2½ percent, as some non-recurrent positive factors will taper off and the international business cycle will advance at a slower pace. In 1989, the tax reform raises net incomes by 3 percent, thereby boosting both consumption and investment. Real exports are likely to rise by 10 percent, but will lose momentum next year. The upturn in economic activity improves labour market conditions without weakening price stability and the balance of payments.