Recovery for Austria's economy?
Data on economic performance in the second half of the year paint a cautiously positive picture. Although GDP declined for the ninth consecutive quarter on an annual basis, it rose again moderately compared with the previous quarter. Given the subdued sentiment indicators in the industrial and construction sectors, we expect only weak economic development in 2025. In 2026, we anticipate a noticeable increase in economic activity as a result of Germany's multi-billion-pound fiscal packages. The inflation rate is likely to rise in 2025, and the unemployment rate should also increase slightly.
Austrian inflation rose to 4.1% in August, twice the Eurozone average. The reasons for this lie, on one hand, in the composition of the Austrian basket of goods, which weights services and, consequently, core inflation several percentage points higher than the European average. On the other hand, high energy costs and high unit labor costs are weighing on service providers, who are passing these additional costs onto customers.
Author
Erste Bank Research Team
Erste Bank
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