The closer the coming year gets, the worse the country’s economic forecasts become. Now the Austrian National Bank has significantly increased the expected budget deficit and reduced growth prospects.
In their forecast published on Friday, the monetary authorities expect a new debt of 3.7 percent for the current year. By 2025, the deficit is expected to rise to 4.1 percent of economic output. The OeNB therefore assumes higher new debts than Wifo and IHS in their latest forecast from October.
Also well above the Maastricht limit in 2026 and 2027
The OeNB also expects new debts for 2026 and 2027, with a deficit of 3.6 percent, well above the Maastricht limit of 3.0 percent set by the EU. The worsening of the deficit in 2025 is “mainly due to the delayed adjustment of pensions and government salaries to inflation and the poor macroeconomic environment,” a National Bank statement said. However, a deficit reduction would also pose “significant downside risk” to the domestic economy.
The growth prospects are also quite pessimistic. The OeNB expects economic output to decline for the second time in a row this year and has lowered its forecast to minus 0.9 percent. The monetary authorities expect growth of only 0.8 percent for 2025. Three months ago, expectations for both years were 0.2 percentage points better. Both values are noticeably worse than in the June forecast. The OeNB also expects the unemployment rate to rise to 7.0 this year and 7.4 percent in 2025. The inflation target of two percent is expected for 2027.
“No signals of impending recovery”
“The weak economy, structural change in the European car industry and high energy and labor costs have serious consequences for Austrian industry and have led to a decline in exports in 2024,” the OeNB wrote. Private consumption also remains weak and there are “currently no signals of an impending recovery”. The OeNB therefore only expects significant growth of 1.6 percent in 2026, but will probably decrease again to 1.3 percent in 2027.
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.
