Is the Austrian Economy Falling Behind?

After a period of stronger growth, the economy in Austria seems to lag behind the performance put in by Germany and the euro area since 2014. This article argues that this is not so much an outcome of a structural gap which opened in 2014 compared to both regions but due more to special business cycle conditions. A comparison between Austria, Germany and the euro area based on the development of industrial production, industrial unit labour costs, labour market performance and inflation does not hint at a structural backlog against these economic areas. Nevertheless, the low growth of the Austrian economy and the stagnation of its industrial production hints at a structural weakness which requires an immediate response by way of structural reforms. In Germany, an idiosyncratic consumption-driven cycle set in, which has not stimulated growth in Austria. Apart from this effect, the euro area economy is spurred by the recent recovery of some countries at its periphery.