Austria Threatened by Second Recession

Austria Threatened by Second Recession / Picture: © Vindobona.org

Together with the economist Monika Merz-Gehring, ÖGB´s chairman Erich Foglar presented an economic outlook for Austria. The economist and ÖGB are rather pessimistic: Austria faces another recession, Merz-Gehring and Foglar say. Foglar: “With a number of austerity cuts, the recession was implemented very professionally.” According to ÖGB´s chairman, the European governments have failed.

The long-term growth trend from 2000 to 2007 could not be re-gained, Merz-Gehring explains. The Austrian economy has lost momentum already in the summer of 2011. As a result, the boom after the first recession in 2008/09 was very short.

Regarding Austria´s education system, Merz-Gehring recommended to support the areas of mathematics, technical and natural sciences. After the crisis of 2008/09, the business cycles in Europe and in the U.S. were not synchronous anymore. The higher economic growth in the US after 2009 is due to the expansive monetary policy, the economist explained.

Foglar explains that Austria´s economy could absorb the recession in 2008/09 because of the welfare state system. “There were automatic stabilizers like the unemployment insurance. In general, export-oriented countries with a strong industrial structure could manage the crisis much better.” Foglar underlines that the industrial sector gained importance in the last decades. From 1960 to 2007, the industrial share of the total economic production was up from 16% to 20%, Foglar argues.