There is still no particularly positive news for the domestic economy. According to the current Wifo/IHS forecast, inflation will also fall in the coming year, but unemployment will rise – and economic growth will likely be lower in 2025.
The economic recovery in Austria is lagging behind expectations. After two years of recession, the economy is expected to grow only 0.6 to 0.7 percent in 2025, according to the current Wifo/IHS forecast. That is less than the autumn forecast, which called for growth of 1.0 to 0.8 percent. At the same time, the budget deficit could rise to 4.2 to 3.7 percent of gross domestic product (GDP) in 2024.
Austerity measures could slow growth
However, the forecast does not yet take into account the fiscal consolidation of a future government, as measures such as spending cuts or tax increases are still being discussed in the coalition negotiations between the ÖVP, SPÖ and NEOS.
According to Wifo, reducing the budget deficit to below 3 percent could further dampen growth and possibly trigger a new recession. Without austerity measures, growth of 1.2 to 1.3 percent is expected for 2026.
Two years of recession have left their mark
Economic output shrank by 1 percent in 2023 and is expected to decline by another 0.9 percent in 2024. Industry and the construction sector are particularly affected. Private consumer spending, exports and business investment also fell. The IHS sees no signs of an early recovery and points to structural problems.
Inflation and unemployment remain a problem
After record inflation rates of 8.6 percent (2022) and 7.8 percent (2023), inflation is expected to fall to 3.0 to 2.9 percent in 2024. However, it could rise again in early 2025 if the brakes on electricity prices are lifted. will expire and costs such as energy taxes, subsidies for green energy and the CO2 price will rise. Inflation of 2.3 to 2.6 percent is expected for 2025, and in 2026 it should be around 2 percent within the target of the European Central Bank (ECB) for the first time.
Unemployment is also rising: after 6.4 percent in 2023, it is expected to rise to 7.0 percent in 2024 and 7.4 percent in 2025.
Source: Krone
I am Ida Scott, a journalist and content author with a passion for uncovering the truth. I have been writing professionally for Today Times Live since 2020 and specialize in political news. My career began when I was just 17; I had already developed a knack for research and an eye for detail which made me stand out from my peers.
