Significantly Improved Growth Outlook. Median-term Forecast for the Austrian Economy until 2022

Following the financial and economic crisis (GDP –3.8 percent in 2009) and a protracted period of subdued growth 2012-2015 (+0.7 percent p.a.), economic activity picked up significantly from mid-2016. For the years 2017 and 2018, the current forecast foresees an annual real GDP growth of 2¾ percent. In the medium term, an average growth of real GDP of 2 percent per year is expected (2013-2017 +1.2 percent p.a.), which is about ¼ percentage point higher than the average of the Euro area. The robust growth for the world economy has a stimulating effect on exports (+3.7 percent p.a.), which in turn has a positive effect on equipment investments. Private consumption is expected to increase by 1½ percent p.a. over the forecast period due to an increase in disposable income (2013-2017 +0.7 percent p.a.). The economic expansion combined with labour market policies ("Employment Bonus" and "Initiative 20,000"), will have a stronger positive effect on the employment beyond that of labour supply, resulting in a drop in unemployment. From 2020 onwards, labour supply is expected to again increase more significantly than labour demand, and as a result the unemployment rate is expected to rise from 8.0 percent in 2019 to 8.4 percent by the end of the forecast period. Inflationary pressure will remain moderate in the medium term, and the inflation differential to the Euro area average is expected to further decrease. The inflation rate based on the consumer price index is forecast at an average of 1.9 percent p.a. The budget is expected to be balanced (both structurally and as defined according to Maastricht) from the middle of the forecast period due to the projected business cycle and the assumed economic policy framework. Based on this, the government debt ratio (total national debt as a percentage of nominal GDP) will decline by around 17 percentage points to nearly 64 percent by 2022 compared to 2017.