Economists are dramatically reducing expectations

Recently, economists have repeatedly revised downward the economic forecast for Austria. It is now almost certain that the Austrian economy will experience its second consecutive year of recession this year. At the beginning of September, Raiffeisen Research forecast a 0.5% GDP decline for the year, and in mid-September, the Oesterreichische Nationalbank (OeNB) calculated a 0.7% GDP decline for 2024. . Economists at the Bank of Austria also believe a recession is likely this year. The previous week, Statistics Austria also revised the 2023 economic decline upward – it was not minus 0.8 percent, but minus 1.0 percent.

Today we look forward to the presentation of this fall's forecasts by the two major institutes, Wifo and IHS. At the end of June, economic researchers from Wifo and IHS forecast a recession (0.0 percent growth) in the domestic economy or a slight increase of 0.3 percent in their quarterly economic forecasts for 2024. This will not last. The outlook for next year is also likely to be calmer. The Bank of Austria recently lowered its 2025 GDP forecast from 1.5 to 1 percent.

It is clear that the budget deficit exceeds three percent

Meanwhile, the Ministry of Finance also raised its 2024 budget deficit forecast to 3.3 percent of GDP. This is higher than the Maastricht limit of three percent. The ministry said the reasons for this are the lack of economic recovery, the effects of the flood disaster that are difficult to estimate, and the increased climate bonus. In March, the deficit forecast was 2.9 percent.

The Finance Council has been talking about a deficit of 3.4% of GDP for some time. IHS and Wifo also did not assume that unemployment in Austria would be less than three percent.

According to Finance Ministry forecasts, the debt ratio is now 79.3 percent of GDP, slightly higher than the level in 2023 (77.8 percent). The GDP for 2024 is now assumed to be much lower, among other things due to the deterioration of the economic situation expected for 2024.