Austrian National Bank Publishes Macroeconomic Forecast for 2023 to 2025

OrganizationsOther ♦ Published: June 18, 2023; 19:29 ♦ (Vindobona)

According to the published forecast of the Oesterreichische Nationalbank (OeNB), the Austrian economy is expected to pick up speed in the second half of 2023, with GDP growing by 0.5 percent in 2023. Accelerated growth of 1.7 percent is forecast for 2024. Although HICP inflation will fall steadily after the highs at the beginning of the year, it will still be above average at 2.9 percent in 2025.

The Austrian National Bank (OeNB) regularly prepares forecasts for the Austrian economy. / Picture: © Wikimedia Commons / Bwag / CC BY-SA (

After the recovery process from the COVID-19 pandemic stalled in the second half of 2022, the Austrian economy found itself in a period of stagnation due to uncertainties stemming from the Russian war of aggression, lower momentum in the international environment, and the sharp rise in energy prices. "We are currently in a phase of zero growth and continued high inflation, but in the second half of the year the economy will pick up again and inflation will slowly decline," OeNB Governor Robert Holzmann commented on the forecast. In contrast to Germany, there is currently no risk of recession in Austria for 2023 as a whole. With the recovery of the international economy in the further course of the year and declining inflationary pressures, noticeable economic growth is again expected in Austria from the second half of 2023. For 2023 as a whole, weak growth of 0.5 percent is expected. In 2024, inflationary pressures will decrease further and domestic economic activity will become the mainstay of the economy.

The inflation settlement, which is delayed by one year due to the Austrian wage formation process, will lead to an exceptionally strong increase in real wages and private consumption. Economic growth will accelerate to 1.7 percent in 2024. Growth in 2025 (1.6 percent) will also be driven by strong consumption. Compared with the OeNB's December forecast, the forecast for real GDP growth is almost unchanged.

HICP inflation peaked at 8.6 percent in 2022 due to energy prices. Inflation will level off from 2023 to 2025, but will still be well above the long-term average at 2.9 percent in 2025. While energy prices are not expected to make any significant contributions, inflation in the service sector will only be slow to recede, which is why core inflation (excluding energy and food) will be 1 percentage point above the HICP rate at 5.1 percent in 2024. The labor market continues to be characterized by a persistent labor shortage. As a result, the unemployment rate is expected to increase only slightly by 0.1 percentage point to 6.4 percent in 2023, despite the weakness in the economy. By 2025, the unemployment rate will fall to just over 6 percent.

Despite the period of stagnation, the budget balance will decline to -2.6 percent of GDP in 2023 due to the expiration of temporary fiscal measures (especially the COVID crisis measures). The further improvement in the budget balance in 2024 to -1.9 percent is due to the resumption of economic momentum and the expiration of the energy packages. The debt ratio is expected to decline from 78.4 percent in 2022 to 70.9 percent in 2025, mainly due to high inflation-driven nominal GDP growth.