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Austria: Economic Upturn Still in Standby-Mode

Published: February 17, 2014; 17:47 · (Vindobona)

According to the analysis of the economic indicator of Bank Austria, there is moderate growth and hope for the first quarter in 2014.

Austria: Economic Upturn Still in Standby-Mode / Picture: © Flickr

After the recovery of economic growth and a growth rate of 0.3 percent (quarter-on-quarter) in the last three months of 2013, the available early indicators currently do not point to an acceleration.

“In January the economic indicator of Bank Austria has reached 0.8 points. This means a minimal decline compared to the previous month. With this, the indicator finds itself in a value domain which shows a continuation of the growth path of the Austrian economy at the beginning of 2014 but does not indicate further upturn in comparison to the previous month,” chief economist at Bank Austria Stefan Bruckbauer said. The moderate economy's growth and recovery momentum of the past month continues.

A faster acceleration of economic growth is still not in sight. According to the economist, restrained growth signals of some emerging countries, and the weak private consumption in particular inhibit a faster recovery. “However, we expect improvement as soon as the first quarter”, Bruckbauer pointed out.

The minor decline of the economic indicator of Bank Austria compared to the previous month was caused by all components. Despite the strong headwind from emerging countries hampering growth the European industrial sentiment indicator, weighed by Austrian exports, has only declined slightly. Business sentiment of the Austrian industrial sector, on the other hand, has decreased significantly and has dropped below the long-term average.

“Not only the the sentiment in European but particularly in the Austrian production sector declined, even the domestic consumers were less confident in January,” Walter Pudschedl, economist at Bank Austria said. Because of the continuing difficult situation on the domestic labor market, the upwind, which the sentiment of the domestic consumers was taken aback by, has calmed down again.

In the course of the first quarter this year economists at Bank Austria anticipate international backing for the domestic economy. “We expect an acceleration of economic growth in Austria of more than 0.5 percent in the first quarted compared to the previous. Apart from the foreign demand the more dynamic investment activity determines a stronger dynamic,” Pudschedl said. More and more positive impluses are coming from the Eurozone. Eventually the countries at the periphery benefitted from the upturn as well which is why the economy in the single currency union will grow by 0.4 percent which is the highest growth rate since mid-2011.

Domestic demand is still weak; particularly private consumption is lacking in dynamics. However, according to estimates by the economists at Bank Austria, private consumption will be able to support the recovery of the Austrian economy so that in 2014 an increase of GDP on an overall basis of 2 percent will be possible. However, in the meantime the first signs of a stabilization of the economy are visible.