In their summer economic forecast published today, Wifo and IHS continue to assume high inflation of 7.5 percent and mini-growth of 0.3 and 0.5 percent respectively. By way of comparison: last year inflation was 8.6 percent and real economic growth was 4.9 percent. Unemployment is expected to increase only minimally this year.
Compared to the March forecast, the Economic Research Institute (Wifo) raised the inflation forecast for 2023 by 0.4 percentage point to 7.5 percent, the Institute for Advanced Studies (IHS) expects an inflation rate of 7.5 percent for this year, just like in March per cent. For 2024, Wifo confirmed the inflation rate of 3.8 percent already predicted in March, and the IHS increased it by 0.5 percentage points to 4 percent.
As in their March forecast, the institutes expect real economic growth of 0.3 and 0.5 percent for the current year. According to Wifo, a recession in the industry can be offset by an increase in added value in the services sector. For the coming year, the Wifo lowered the growth forecast for the domestic economy by 0.4 percentage point to 1.4 percent, the IHS left the estimate at 1.4 percent.
Unemployment is rising only slightly
However, the weak economic growth has left relatively few traces on the labor market. Wifo expects the national unemployment rate to rise by only 0.1 percentage point to 6.4 percent, while the IHS expects an increase of 0.2 percentage point. According to the economic experts, the robust labor market, strong nominal wage increases and a falling savings ratio should lead to an increase in real private consumption this year by 0.9 and 0.5 percent respectively. For 2024, economists expect unemployment to fall to 6.1 or 6.3 percent.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
