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Forecast: Austria's Economic Growth in 2011 at 2.5%

Published: April 2, 2011; 07:50 · (Vindobona)

The upswing in the first half year continues mainly due to strongly growing exports. A flattening of growth is expected after this.

Forecast: Austria's Economic Growth in 2011 at 2.5% / Picture: © Vindobona.org

The upswing continues in Austria.. The lively growth in Germany in 2010 brought a significant expansion of exports with it. The Austrian industry thus benefited indirectly from the strong economic expansion in emerging countries. However, the increase in capital spending in the last three quarters points to a transition of the export boom to investments. This trend should continue, as the economic indicators point in the 1st Half of 2011 to strong growth. In the second half of 2011, this expansion will slow down somewhat, in parallel to the international economy.

For 2011, the WIFO expects an economic growth of +2.5%, and +2.0% for 2012.

Because of rising costs of raw materials and energy prices, inflation (CPI) accelerates significantly in 2011 to +2.8%; about 0.4 percentage points are due to increases in indirect taxes in the course of budget consolidation. In 2012 these effects will be largely gone, and wage increases should be somewhat higher than in 2011. The inflation rate for the year 2012 is therefore estimated at 2.4%.

Consumption expenditure of private households only increases weakly in period of the forecast due to low to moderate income growth. Due to higher inflation, real wages per capita in 2011 are even expected to fall, but in 2012 they are expected to rise again slightly.

The economic boom and the consolidation measures improve the financial balance of public finances. The expected inclusion of federal subsidies to finance infrastructure spending of the ÖBB increases the deficit however. Taking into account this decision on the calculation method in advance, the financial balance of public finances in 2011 will probably reach -3.4% of the GDP and -3% in 2012.

The main risks to the economy are currently the rise in raw materials and energy prices, the crisis in Japan and the continuing unstable situation in the financial and banking system.

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