Economic Outlook for 2021 and 2022: Fourth COVID 19 Wave Slows Strong Upswing

Value added in Austria grew significantly in the second quarter 2021, especially in the crisis-hit sectors. However, growth weakened again with the increase in the incidence of infections from August 2021. The renewed COVID 19 wave will again dampen the catch-up process in certain service sectors in the fourth quarter. The economic upswing is, hence, heterogeneous across sectors, but it is extremely strong overall. The labour market is also recovering rapidly but will suffer a temporary setback from the fourth COVID 19 wave. At the same time, inflation will con-tinue to accelerate, while monetary policy – in line with the ECB's new strategy – will remain expansionary.