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Subdued Economic Growth, High Unemployment and Fiscal Consolidation Shaping the Economic Outlook. Medium-term Forecast for the Austrian Economy until 2018

Author

Listed:
  • Josef Baumgartner
  • Serguei Kaniovski
  • Markus Leibrecht

    (WIFO)

Abstract

After the slump in economic growth between late 2012 and the middle of 2013, the Austrian economy is expected to follow a moderate upward trend, with GDP growth averaging 1.8 percent p.a. over the period 2014-2018. Private consumption in particular will remain subdued, as private households seem inclined to further increase their savings. While the gradual pace of expansion will lead to more jobs (2014-2018 +0.8 percent p.a.), unemployment is unlikely to decline significantly, given the parallel increase in both domestic and foreign labour supply. From a peak of 7.9 percent (as defined by the public employment service) in 2015, the unemployment rate is projected to decline only slightly to 7.7 percent by the forecast horizon. Inflationary pressure remains weak over the medium term, with headline inflation anticipated at an average 1.9 percent. A balanced general government budget (in structural terms as well as in accordance to the "Maastricht" definition) will not be achieved by the structural consolidation scenario underlying the forecast (€ 2 billion as from 2014 and a further € 1 billion from 2015 onwards).

Suggested Citation

  • Josef Baumgartner & Serguei Kaniovski & Markus Leibrecht, 2014. "Subdued Economic Growth, High Unemployment and Fiscal Consolidation Shaping the Economic Outlook. Medium-term Forecast for the Austrian Economy until 2018," WIFO Bulletin, WIFO, vol. 19(3), pages 21-34, March.
  • Handle: RePEc:wfo:wblltn:y:2014:i:3:p:21-34
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    Cited by:

    1. Margit Schratzenstaller, 2015. "Short- and Medium-Term Prospects of Fiscal Policy. Draft Federal Budget 2014-15 and Federal Medium-Term Expenditure Framework 2015-2018," WIFO Bulletin, WIFO, vol. 20(3), pages 31-46, February.

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