Economic Report Vienna

The turning point of the COVID-19 pandemic divides the observation period of this economic report into two completely different phases: a "soft landing" of the economy in the course of 2019 and at the beginning of 2020 was followed by a massive economic downturn towards the end of the observation period. In the course of 2019, the dynamics of Vienna's economy lost considerable strength without leading to a recession. In line with the national and international economy, real Gross Value Added in Vienna still increased by 1.2 percent in the second half of 2019. Annual growth in 2019 (+1.5 percent) was thus 0.7 percentage point below that of 2018, but the regional momentum matched the Austrian average and was once again associated with substantial employment gains which were also high by national standards (+1.9 percent, Austria +1.6 percent). The first signs of an incipient economic recovery in the first two months of the current year came to an abrupt halt in mid-March with the outbreak of the pandemic and the measures taken to contain it. Therefore, a severe recession is foreseeable for Vienna in 2020: economic output is likely to decline by at least 4.1 percent this year, with slight structure-related advantages over Austria as a whole (–5.2 percent). Despite supporting measures of COVID-19 short-time work, this is likely to result in significant employment losses (–1.5 percent, Austria –1.7 percent). The regional unemployment rate will thus rise by about 2 percentage points and, at 13.7 percent on average for the year, reach its highest level since the immediate post-war period.