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Financial Market Crisis Weighing on Economic Growth. Economic Outlook for 2008 and 2009


  • Markus Marterbauer



GDP in Austria is projected to grow by 2.1 percent in volume this year, markedly down from the pace observed in the last two years when growth almost reached 3½ percent respectively. Next year, the momentum may moderate further, to an annual increase of 1.7 percent. The forecast, particularly for 2009, is subject to an unusually wide margin of uncertainty, since scope and duration of the current international financial market crisis can not be reliably predicted. The credit crisis has already left a clear impact on the real economy in the USA, and neither the global economy at large nor the euro area will remain entirely unaffected. Also in Austria, exports, industrial output and investment are set to decelerate during 2008, having still been buoyant at the beginning of the year. Private consumption is unlikely to provide major support as high inflation (2008: +2.9 percent) will prevent net real income per employee from rising. Job creation, having been strong in early 2008, will gradually abate with economic activity slackening, and the downward trend in unemployment is likely to turn around in 2009.

Suggested Citation

  • Markus Marterbauer, 2008. "Financial Market Crisis Weighing on Economic Growth. Economic Outlook for 2008 and 2009," Austrian Economic Quarterly, WIFO, vol. 13(2), pages 53-64, April.
  • Handle: RePEc:wfo:wquart:y:2008:i:2:p:53-64

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    References listed on IDEAS

    1. Douglas Sutherland & Robert Price & Isabelle Joumard, 2006. "Sub-central government fiscal rules," OECD Economic Studies, OECD Publishing, vol. 2005(2), pages 141-181.
    2. Zodrow, George R. & Mieszkowski, Peter, 1986. "Pigou, Tiebout, property taxation, and the underprovision of local public goods," Journal of Urban Economics, Elsevier, vol. 19(3), pages 356-370, May.
    3. Wrede, Matthias, 1999. "Tragedy of the Fiscal Common?: Fiscal Stock Externalities in a Leviathan Model of Federalism," Public Choice, Springer, vol. 101(3-4), pages 177-193, December.
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    1. Josef Baumgartner & Serguei Kaniovski & Ewald Walterskirchen, 2008. "Private Consumption Becomes Strengthening Support to Growth due to Tax Cuts and Easing Inflation. Medium-term Projections for the Austrian Economy from 2008 to 2012," Austrian Economic Quarterly, WIFO, vol. 13(2), pages 73-83, July.

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