Financial Market Crisis Weighing on Economic Growth. Economic Outlook for 2008 and 2009
GDP in Austria is projected to grow by 2.1 percent in volume this year, markedly down from the pace observed in the last two years when growth almost reached 3½ percent respectively. Next year, the momentum may moderate further, to an annual increase of 1.7 percent. The forecast, particularly for 2009, is subject to an unusually wide margin of uncertainty, since scope and duration of the current international financial market crisis can not be reliably predicted. The credit crisis has already left a clear impact on the real economy in the USA, and neither the global economy at large nor the euro area will remain entirely unaffected. Also in Austria, exports, industrial output and investment are set to decelerate during 2008, having still been buoyant at the beginning of the year. Private consumption is unlikely to provide major support as high inflation (2008: +2.9 percent) will prevent net real income per employee from rising. Job creation, having been strong in early 2008, will gradually abate with economic activity slackening, and the downward trend in unemployment is likely to turn around in 2009.
Economic growth in Austria is set to decelerate to an average 2.1 percent in volume this year. This is primarily the consequence of the international financial crisis that originated from US real estate markets. Scope and duration of that crisis can still not be reliably assessed at present. The projection for GDP growth in 2009 of 1.7 percent is therefore subject to considerable risk. Exports, industrial output and investment are slackening markedly. Private consumption is not gaining momentum, partly because of inflation accelerating to 2.9 percent. While employment this year is rising even faster than expected, the decline in unemployment is likely to reverse as from 2009.
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