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Austria Economic activity is projected to slowly recover from the current downturn, with GDP rising by 0.2% in 2023 and 1.6% in 2024, supported by stronger domestic demand. Headline inflation will gradually decrease and rising real wages will support household incomes from the second half of 2023. Tight labour market conditions will loosen slightly over the projection period, bringing a small increase in unemployment. Business investment will be damped by elevated interest rates and labour costs. The fiscal stance will tighten over the projection period with the phasing out of pandemic-related support in 2023 and of anti-inflation measures in 2024. Some of these measures will be substituted by welcome structural fiscal changes aimed at lifting growth by reducing labour costs. Other temporary measures compensating for high energy prices that are still in place over the next two years need to be better targeted to avoid weakening price signals and to reduce inflation pressures. Activating existing labour reserves would help remedy persistent labour shortages. Economic growth has slowed A contraction of 0.1% in the fourth quarter of 2022 was reversed in the first quarter of 2023. High-frequency indicators suggest that output growth will remain weak until the second half of 2023. High inflation is weighing on private consumption. Elevated uncertainty and tighter financial conditions have slowed private investment. Headline inflation fell over the first quarter to 9.5% in April 2023. However, core inflation continued to rise, predominantly driven by services sectors. Labour market conditions are tight but have started to cool with the unemployment rate increasing slightly from a low level and the job vacancy rate trending down since the third quarter of 2022.
Austria
1. Harmonised index of consumer prices excluding food, energy, alcohol and tobacco. 2. The job vacancy rate is the number of vacancies divided by the number of occupied posts plus the number of vacancies. Source: OECD Main Economic Indicators database; and Eurostat. StatLink 2 https://stat.link/pq2b5g
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023