Austria's economy in 2024: slow growth and financing problems forecast

Austria's economy in 2024: slow growth and financing problems forecast

According to a report by exxpress.at, The Austrian economy will only grow slowly in the coming years as the weakening industry is slowing down the recovery. The forecast from Wifo and IHS calls for GDP growth of 0.9 and 0.8 percent, respectively, with rising real incomes expected to support the economy.

Due to lower real incomes and global industrial problems, the domestic economy will shrink by 0.8 and 0.7 percent in 2023. The inflation rate of 7.9 percent (Wifo) and 7.8 percent (IHS) is expected to fall to 3.1 and 3.0 percent by 2025.

The labor market in Austria has so far only been slightly affected by the economic downturn. The unemployment rate is expected to remain stable in 2024, with a slight increase to 6.6 percent forecast. A decline is expected again in 2025.

Public finances are facing challenges, with an expected fiscal balance of minus 2.3 percent of GDP in 2023 (Wifo) and minus 2.8 percent (IHS). Both institutes forecast negative balances for 2024, which will amount to minus 2 and 2.2 percent respectively by 2025. Rising expenditure and lower government revenues due to measures such as compensating for cold progression are placing additional strain on the budget.

In view of these forecasts, it is to be expected that the Austrian economy will only grow slowly for the time being, although industry could continue to have a slowing effect. However, rising real incomes could help support the economy. However, increasing unemployment and public finance challenges require careful planning and action by the government to support economic development while maintaining control of public finances.