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Nowotny Expects Lower Growth Rates

Published: October 31, 2011; 12:39 · (Vindobona)

The head of the Austrian Central Bank (OeNB) Ewald Nowotny lowers the growth estimation for the Austrian economy.

Nowotny Expects Lower Growth Rates / Picture: © Wikipedia / Christian Wirth (Wirthi)

The Austrian Central Bank will have to correct its recent growth forecast. The next one will be published by the beginning of December.

For 2011, Nowotny sees a substantial growth of 3.0% - in spite of the drastic cool-down in the third and fourth quarter of 2011. “In 2012 we will have a significantly lower growth.”, Nowotny states.

Also the economic research institutes IHS and WIFO have cut their growth estimations for 2012. With an expected economic growth of 0.8% (WIFO) or 1.3% (IHS), the next year will show the lowest growth rates since 2002.

Regarding inflation, Nowotny sees a decrease, which is due to the lower economic growth. In the second half of 2012, the inflation should go below 2.0%.

Besides this, the Triple-A rating is not endangered. But the highest rating grade must be a major aim of the Austrian government. In order to guarantee the AAA rating, the government should sustainably and credibly restructure the Austrian public finance and reduce public debt. “This is not easy, but there is no alternative.”, Nowotny says.

Nowotny is convinced that the Austrian banking system is robust. However, banks must find a way to estimate their risks in a better way. The CEE region is a success model, Nowotny believes. But the funds should be provided by their domestic markets and not via foreign currency loans.

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