Business Activity Keeping Strong Momentum – Slowdown Expected Only in 2008. Economic Outlook 2006 to 2008

In 2006, the Austrian economy benefited from the cyclical upswing in Europe. The implicit growth impulse translated in the course of the year into higher investment demand. Domestic demand will drive activity also in 2007, even if the "echo effect" from the positive one-off factors at work in 2006 will dampen the year-on-year rate of growth. In 2008, the European business cycle is expected to lose momentum. Nevertheless, GDP growth in Austria should outpace the euro area average. Given the cyclical conditions, the stance of Austrian fiscal policy is expansionary.