Potential Growth in Austria: Estimation and Discussion of Supply-Side Growth Opportunities

Potential growth describes the supply-side opportunities for economic growth, assuming a normal use of production factors available on a medium-term basis, i.e., capital, labour and technology. Despite frequent references to this concept in economic policy, there exists no standard method of estimating potential growth. High unemployment rates as well as training and early-retirement measures suggest that labour is under-utilised and this may be taken as indicator of possible margins for growth. Depending on the assessment of the employability of both registered and hidden unemployed, potential growth in 2006 is estimated to be between 2.5 to 2.9 percent.