Shrinking again

Austria’s economy shrinks slightly again

Workers in the steel industry(Bild: APA/dpa/Christophe Gateau)

Austria's economy is likely to shrink by another 0.5 percent this year. This was announced by the Organization for Economic Cooperation and Development (OECD) on Wednesday. Next year, however, the gross domestic product (GDP) will probably grow again - by 1.1 percent.

However, this means that growth is still below the G20 countries, which are expected to grow by 3.3 percent next year, and below the eurozone (1.3 percent). The outlook for the weakening German economy is worse: according to the forecast, it will not grow by more than 0.7 percent in the coming year.

According to the OECD, inflation in Germany will return to a level close to the European Central Bank's (ECB) target of two percent in the coming year. Households are likely to consume a little more again. At the same time, investment is likely to be limited and unemployment is expected to rise, particularly in the struggling industrial sector.

This is the OECD economic forecast for 2024 to 2026.

According to the forecast, the deficit in the national budget will still amount to over three percent of GDP in 2025. According to the OECD, Austria's economy is struggling with structural problems, including demographic change in the labor market. The organization recommends relaxing the entry requirements for certain freelance services and helping to "revive business dynamism". Incentives should be provided for women to make it easier for them to work full-time.

Economic researchers from Wifo and IHS were less optimistic. They forecast real economic growth of one and 0.8 percent respectively in the coming year - after two years of shrinking economic output.