Bright Picture Before the Gulf Crisis

The economic situation remained highly satisfactory until the beginning of the Gulf crisis in early August. Demand rose unabated in manufacturing and construction and business confidence was high according to the latest WIFO survey. Private demand for consumer durables remained strong in April and May. Signals from the foreign sector were a little weaker, however: tourism in July remained clearly below high expectations and commodity exports lost some momentum due to slackening demand in the U. S. and transition problems of the Eastern European countries. Despite domestic strenght the rate of inflation did not exceed 3 percent until August and the current account remained in surplus.