Austria’s Economy Bounces Back with Slight Recovery and Growth Expected in 2023

After the recession in 2023, the National Bank of Austria is projecting a slight recovery in the domestic economy this year with growth expected to be 0.3 percent. The increase is mainly driven by private consumption. In its March forecast, the OeNB had initially assumed a growth rate of 0.5 percent for 2024. However, due to high wages in Austria, which are above the Eurozone average, posing a challenge for price competitiveness in exports, inflation is expected to significantly weaken this year to 3.4 percent from 7.7 percent last year.

The labor market is expected to remain robust until 2026, with wage growth reaching its peak in early 2024 and gradually declining in line with inflation. The unemployment rate is forecasted to increase slightly this year before declining to 6.3 percent by 2026.

In terms of economic growth, it is projected to accelerate in the next two years with growth rates of 1.8 percent in 2025 and 1.5 percent in 2026. Despite these positive developments, budget consolidation for the years 2025 and 2026 remains a priority due to expectations of new debt exceeding three percent each year.

Overall, industries such as catering and rents continue to contribute strongly to inflation in Austria.

In summary, while there are concerns about high wages and budget consolidation needs for future years, the National Bank of Austria projects positive developments in the domestic economy with increased consumption and investments anticipated over the coming years.