Economic Growth Slowing Down. Economic Outlook for 2008 and 2009
Growth of real GDP is expected to moderate from 3.4 percent in 2007 to 2.2 percent in 2008. A first outlook into 2009 suggests a rate of growth of 2 percent. The deceleration is the consequence of a less favourable international growth environment, with the imminent cyclical downturn in the USA, the persistent crisis on financial markets and the marked appreciation of the euro. In Austria, exports and manufacturing output will therefore advance at a slower pace, following the boom in the last two years. Further ahead, also investment in machinery and equipment as well as construction will lose some of its previous momentum. In spite of the benign business conditions, the upswing of the last few years has not led to a revival of consumer spendings. The main reason has been the sluggish growth of earnings. Meanwhile, also the acceleration of inflation (with a projected rate of 2.6 percent in 2008) is squeezing households' real disposable income. The business cycle slowdown will prevent a further decline of unemployment or a reduction of the budget deficit.
GDP growth in Austria is set to abate from 3.4 percent in 2007 to 2.2 percent in 2008. A first preview to 2009 suggests a rate of growth around 2 percent. Main reason for the deceleration is a weakening of the international environment, as witnessed by the cyclical downturn in the USA, the crisis on financial markets and the appreciation of the euro. In Austria too, investment growth is losing momentum, and the support to activity from private consumption will be constrained by the meager gains in real incomes. The latter are squeezed also by a marked rise in inflation, projected at an annual 2.6 percent for 2008. The slowdown of growth will keep the rate of unemployment at 6¼ percent of the labour force (4¼ percent on Eurostat definitions).
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