The economic research institute (Wifo) expects only weak economic growth until 2028. The institute announced on Tuesday that Austria’s economic output will increase by about one and a half percent annually over the next five years. The prospects are therefore slightly worse than expected a year ago.
In 2022, the economy seemed to be on track to make up for the slump caused by the Corona crisis in 2020. After the new recession in 2023, there are no longer any signs of an above-average increase. According to the Wifo forecast, the Austrian economy will not be able to compensate for the loss of value creation due to the 2023 recession in 2028.
Improvement for the unemployed
According to the forecast, the unemployment rate is expected to drop from 6.8 percent to 5.7 percent by 2028. However, there is a huge upheaval to process. The baby boomers are retiring and the younger generations are rising. Baby boomers have less education on average. Finding students in particular will likely be more difficult for companies, because many young people are pursuing higher education. Wifo expects that the labor supply will increase further – because more foreign workers will be added. The share of foreign workers in total employment is expected to rise to almost 29 percent by 2028; that would be more than twice as high as in 2010 (13.8 percent).
Real wages are rising this year
Real wages per capita should rise so much this year that they will make up for the losses of the previous two years. In subsequent years, per capita income growth will continue to decline, but over the entire 2024-2028 period, real wages are expected to grow faster than productivity (+0.4 percent per year). It is therefore likely that unit labor costs will increase every year.
Slightly growing national debt expected
Wifo expects that over the next five years the government deficit will be just under three percent and that the national debt will continue to grow slightly – both in absolute figures and as a percentage of gross domestic product (GDP). By 2028, the debt is expected to reach €450 billion or 78 percent of GDP “significantly higher than the requirements of the revised European fiscal framework, which would trigger the launch of an ‘excessive deficit procedure’”, said Wifo.
“The current forecast has numerous downside risks,” write authors Josef Baumgartner, Serguei Kaniovski and Hans Pitlik. The list is long: the conflict in the Middle East and the war in Ukraine, renewed supply bottlenecks and sharp price increases for energy, grain or raw materials, new, more dangerous Covid variants, but also problems in the Chinese economy that could have a negative impact in the whole world. economy – until an invasion of Taiwan by China.
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.
