Economic Boom is Weakening. The Austrian Economy in 2000
The economic expansion which had started off in mid 1999 continued throughout the first half of 2000. The international situation (vigorous domestic demand in the USA, strong growth in the CEECs, stable financial markets) made for a marked stimulation of Austrian foreign trade, which benefited mostly Austria's export-oriented manufacturers. The dynamic growth slowed down over the year, and both export demand and most domestic demand components saw their growth slackening in the second half of 2000. Over the whole year 2000, total production expanded by 3.2 percent. The low effective exchange rate and the strongly booming economy on an international level caused Austrian exports to grow by 13.4 percent in nominal terms. But higher prices for crude oil and a weak euro meant a steep climb in the cost of importing raw materials and energy. In nominal terms, imports grew at a greater rate than exports, so that the current account deficit rose to almost ATS 90 billion in 2000. Domestic demand similarly recorded a stronger growth rate than in 1999. Consumption by private households was higher by 2.7 percent in real terms. The trend was supported by the expansive effect of the tax reform and "family package" on personal disposable incomes. A dampening effect was exerted in the second half of the year by the loss of purchasing power due to higher fuel prices and a rise in some taxes and public charges. In 2000, the growth was highest for manufacturing, which reaped the benefits of a booming export demand. Its real net output rose by 8.2 percent. With employment remaining nearly stable, the result was a substantial growth in productivity. In the first six months of 2000, the rise in profits attendant to the boom and optimistic prospects made companies invest heavily, whereas in the second half expectations became more muted. Altogether, spending on equipment rose by 5 percent in real terms in 2000; spending on new construction was weak. The lively business activity was reflected in the number of employment relationships (excluding parental leave) which grew by 0.9 percent (a plus of 29,000) in 2000. Up to the spring of 2000, job growth was brisker than in 1999, but it abated noticeably throughout the rest of the year. In terms of economic growth, job growth was unusually weak, i.e., labour productivity received a major boost. At a reduction of 27,400, unemployment dropped more quickly than expected in view of employment trends. With the working age population (aged 15 to 59) contracting and the "silent reserve" nearly exhausted, the job openings were increasingly covered from the pool of unemployed. The effect was further enhanced by labour market policy measures (such as job coaching). After the annual inflation rate had sunk to a record low (0.6 percent) in 1999, it shot up again in 2000 (2.3 percent), mainly because of the drastic rise in crude oil prices and the weak euro. Another surge in prices was produced by a rise in taxes and public charges in and after June. By September, the inflation rate had once again reached the 3 percent threshold (November 3.1 percent). The EU harmonised consumer price index, which is weighted differently, increased by 2 percent. Nevertheless, second only to France (1.8 percent), Austria remained the most inflation-resistant country in the euro zone (1999 1.1 percent, 2000 2.3 percent). General government financial balance was reduced to –1.1 percent of GDP in 2000, which was significantly below the 1999 rate (–2.1 percent). Thanks to the boom, the state achieved more revenues, and single budgetary measures counterbalanced the effect of the tax reform and "family package". Auctioning off the UMTS licences produced a satisfactory ATS 11 billion in additional income. The central government deficit could be reduced to about ATS 45 billion in 2000 (compared to ATS 63.4 billion in 1999), or from 2.3 percent to 1.6 percent of GDP.
Kräftiges Wirtschaftswachstum verliert an Dynamik. Österreichs Wirtschaft im Jahr 2000; Economic Boom is Weakening. The Austrian Economy in 2000
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