Sluggish Economic Growth in Austria over the Medium Term

Driven by international developments, the Austrian economy is gradually recovering from the recession in 2023 (–0,8 percent). WIFO already expects real economic growth of almost 1¾ percent for 2026. For 2024-2028, average GDP growth is projected at 1½ percent p.a. (Ø 2010-2019 +1.5 percent p.a.). Demographic trends will intensify the shortage of labour force in the forecast period. On the one hand, this dampens the medium-term outlook, but on the other hand it noticeably reduces unemployment: the unemployment rate already fell below the pre-crisis level of 2019 in 2022 and is expected to decline to 5.8 percent by 2028. The strong upward trend in prices observed from the end of 2021 continues in 2023 (+7.7 percent). In 2024, the inflation rate will decline to 4 percent and gradually approaches the ECB's 2 percent target by 2028. The deficit ratio is forecasted at 2½ percent of nominal GDP in 2023, falls to 1½ percent by 2025 and rises slightly to 1.8 percent of GDP by the end of the forecast period.