Upswing Boosts Manufacturing Output and Employment. Economic Outlook for 1998 and 1999

The economic upswing, which began in mid-1996, is expected to gather pace in 1998. Aggregate demand and output are forecast to expand by 2¾ and 3 percent in real terms in 1998 and 1999. The export boom, which is supported by the expansion in Austria's export markets and a sustained improvement in price competitiveness, will continue to be the main driving force of the pick-up in economic activity. The surge in merchandise exports and the plunge in crude oil prices will help to reduce the deficit in the trade and the current account. Total domestic demand is also slowly gaining momentum. The favorable cost and demand developments are likely to stimulate capital spending; the accelerating growth in disposable income will boost consumer expenditures. The rise in aggregate demand is projected to outpace productivity gains for the first time in several years and strengthen the demand for labor. The number of persons in dependent employment (excluding persons in military service and on parental leave) is forecast to rise by almost 30,000 in 1998 and 1999, respectively. Given the marked rise in the supply of labor, unemployment will increase in 1998, but only slightly.