The domestic economy is still weakened and lags behind the European. In the meantime, even higher inflation is expected. It is therefore not surprising that people are reluctant to spend money.
“Due to the surprisingly strong increase in inflation at the start of the year, we have increased our prediction by an average of 2.2 to 2.5 percent for 2025,” said economist Walter Pudschedl. Inflation of 1.9 percent is expected for 2026. The weak economy in the coming months is intended to gradually delay inflation. The price increase in January would have caused the elapsrem of the electricity price, the increase in the CO2 price and other price adjustments.
In any case, consumers are still very restless. Despite the high real wage growth, they remained cautious to buy and in divisions to a greater extent than normal, the chief economist Stefan Bruckbauer explained. However, you must take your purchase recording somewhat in the course of the year. However, a strong revival of consumption is not to be expected – the persistently high uncertainty, care for the workplace and budgetary measures.
Not a good atmosphere in the construction sector
In all sectors of the economy, the situation assessment is less favorable than in the Euro area, Unicredit Bank explains Austria in its current report. The bank economists revise the prediction for economic growth 2025 from 0.9 to 0.3 percent. The economy has shrunk in the last two years.
The economic indicator of the bank was still with minus 2.6 points in the negative area in January, despite a slight increase, and therefore according to Bruckbauer, “” for the time being at a very low level “. The service sector and a somewhat bright export environment supported the improvement. In addition to tourism and retail trade, more in the bend would also have trade in motor vehicles and transport services. The mood in January had only been somewhat cloudy – the moderate order development in the construction of the construction caused a bit. In civil engineering, the situation even improved considerably and it was stable in the expansion sector.
The indicator of the Unicredit-Bank-Bank-Bongriacher has a similar amount if in the annual average 2023 and 2024, “both years that have brought a GDP decrease in Austria of about 1 percent,” Bruckbauer recalled.
Again strong inflation allowance compared to the Euro area
This year in January, inflation increased considerably to 3.3 percent, according to the statistics of the Austria statistics, after it had calmed down from 7.8 to 2.9 percent in 2024. That was again a noticeable inflation allowance compared to the euro area. According to a first estimate of the Statistics Authority Eurostat, inflation was 2.5 percent and in economically battered Germany only 2.3 percent.
According to the economic indicator, Austria takes only small steps from the recession. “A swallow does not make a summer yet,” Pudschedl emphasized. The signs of a fast end of the growth vessel of the Austrian economy are “currently not visible”. “However, we remain optimistic that (…) Austria is spared a third year of a recession.” Regime of US President Donald Trump and the interest rate policy of the European Central Bank (ECB).
Unemployment remains in the framework
The effects of the ongoing economic fleece on the labor market must be limited. According to the bank economy, the unemployment rate must increase this year from 7 to 7.3 percent and then stay at this level in 2026. The increase in staff’s supply is delayed by leaving the baby or generation of the work process, lower immigration and the high level of part -time work.
Economy in the euro area for the turn of the year
The economy in the eurozone, on the other hand, grew at least for the turn of the year. The gross domestic product (GDP) rose by 0.1 percent for the previous quarter from October to December, as the EU Statistics Office Eurostat announced on Friday. Stagnation was reported in an earlier estimate. In the summer quarter, the growth of 0.4 percent stood out. For the year 2024 there is a plus for GDP of 0.7 percent for the Euro currency area.
Although there were major differences in the individual member states of the eurozone: while the economy in Spain continues to run on relatively high tours and GDP rose by 0.8 percent in the quarterly comparison, the two largest economies in the currency area shrink. In Germany, the economic output fell by 0.2 percent and 0.1 percent in France. Stagnation is reported from Italy. Eurostat reports the strongest setback in the eurozone in Ireland. Here the economic output shrink in the fourth quarter by 1.3 percent, but after it had grown by 3.5 percent earlier in the quarter.
The States of the Monetary Union are lagging behind the United States economically, which in 2024 brought it to growth of 2.8 percent. So far, the labor market in the euro area has survived the economic fleece: in the last quarter of 2024, according to Eurostat, the number of employees even rose by 0.1 percent for the previous quarter.
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.
