Economic Growth Remaining Subdued, with High Unemployment Persisting. Medium-term Forecast for the Austrian Economy Until 2019

Following a cyclical downturn in 2014, the Austrian economy is set to grow at a moderate pace of 1.3 percent p.a. over the period from 2015 to 2019. Private consumption and investment will experience a sluggish growth, while the external contribution to GDP growth will remain modest. The gradual expansion of output will allow employment to rise by an average 0.8 percent p.a. This, however, will not prevent unemployment from rising further, as growth of labour supply – both domestic and from abroad – will outnumber the creation of new jobs. The unemployment rate (national definition) is expected to peak at 9.4 percent in 2017-18, before edging down by the end of the forecast horizon. Inflationary pressure is expected to stay subdued, with headline inflation averaging at 1.6 percent. Given the expected cyclical profile and the underlying assumptions on the policy framework, a balanced general government budget (in structural as well as in nominal terms) will not be reached within the forecast period.