Statistics Austria sees prosperity in decline

Austria’s economy has contracted for the sixth quarter in a row, and there has been an almost continuous decline in industrial turnover since March 2023, according to new data from Statistics Austria.

Statistics Austria head of statistics Tobias Thomas painted a gloomy picture at the “Austrian Economic Barometer” presentation on Wednesday, 4 December, telling journalists “in the last five years, prosperity has declined significantly (and) Austria is still stuck in a recession.”

From July to September, Austria’s real gross domestic product (GDP) was 0.6% below the same quarter of the previous year and 0.1% down from the previous quarter, according to preliminary calculations. “With a drop of 3.7%, industry is once again particularly affected, as it continues to suffer from the global economic downturn,” Thomas said.

Decline in services, uptick for housing

Other economic services were down 2.5%, construction fell 1.7% and trade was 1.5% lower. There was 1% growth in the housing sector and public administration, which partially cushioned the decline.

However, the decline in manufacturing turnover continued in October 2024, down 1.4% year-on-year. Turnover in industry was down by 2.2%, while construction climbed 3.6%.  From January to August 2024, imports fell 9.8% year-on-year while exports slumped by 4.4%.

Electricity price brake dampened inflation

November inflation is expected to be 1.9%, slightly up on 1.8% in the previous two months and just below the European Central Bank’s 2% target. The trend of moderate inflation rates in Austria is thus continuing, Thomas commented.

Inflation continues to be driven by the services sector, as the wholesale price and producer price indices for the manufacturing sector continued to decline.

Economics directorate head at Statistics Austria Ingolf Bottcher said the government’s electricity price freeze has dampened inflation, but this well expire at the end of the year. Moreover, Austria’s core inflation rate is over 2%.

Wifo to lower economic forecast

The disappointing economic development in the second and third quarters will impact the official forecasts for 2024-25. In October, Wifo economists were still forecasting a 0.6% decline in Austrian economic output this year and growth of 1% next year. It will update these projections on 20 December. Based on the GDP figures for the second and third quarters, there is “some downward scope”, Austrian Institute for Economic Research (WIFO) official Marcus Scheiblecker told local media. 

Due to the weaker economic development, the budget deficit expected by the WIFO in 2024 and 2025 is likely to be slightly higher. Details on the budget balance will be provided in the winter forecast, Scheiblecker added.