WIFO Bulletin

The WIFO Bulletin is published online and focuses on

  • International and Austrian economic outlooks,
  • Recent economic developments,
  • Studies on European integration.

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You may find all articles of the Bulletin's predecessor here:  Austrian Economic Quarterly

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Recent issues (127 hits)

 
In Austria, economic output fell in the first half of 2020 due to the measures taken to contain the COVID-19 pandemic. A decline of 2.4 percent compared to the previous period in the first quarter was followed by a contraction of 10.7 percent in the second quarter (seasonally adjusted according to Eurostat standard). Although companies continue to assess the current situation unfavourably in surveys, expectation indicators in particular have improved. Economic risks have recently been pointing more strongly downwards again due to the recent increase in the number of infections.
WIFO Bulletin, 2020, 25(6), pp.45-58
Online since: 11.08.2020 0:00
 
The measures adopted to contain the COVID-19 pandemic give rise to a recession in Austria. With a slump by 7.0 percent year-on-year, demand and output will contract even more sharply in 2020 than during the economic and financial market crisis of 2008-09. Since the trough now appears to have been passed, the recession promises to be short. Nevertheless, GDP will still not be back to its pre-crisis level by the end of the projection horizon (end of 2021).
 
Austria's economic output fell sharply and on a broad basis in the first quarter of 2020 due to the measures taken to contain the COVID-19 pandemic. Although companies continue to assess the current situation unfavourably, expectation indicators improved.
 
The global economy was hit strongly by the effects of the COVID-19 related restrictions imposed worldwide to contain the pandemic. Initial data already show a decline in GDP in all major economic regions in the first quarter. Confidence indicators deteriorated to a level similar to that during the financial market crisis in 2008-09. In Austria, too, economic output already declined in the first quarter. Consumption as well as accommodation and food service activities, transportation, wholesale and retail trade, repair of motor vehicles and motorcycles and other service activities were particularly affected. After rising strongly within two weeks at the end of March, unemployment continued to rise in April, albeit at a slower pace. Inflation fell in March.
 
The trade conflict between China and the USA and the crisis in the automotive industry are having a negative impact on industrial activity worldwide. New strict EU emission regulations will continue to create a difficult environment in the future. However, the service sector is proving to be a strong pillar of the economy. In Austria, tourism in particular continues to expand unabated.
 
The trade conflict between China and the USA and the crisis in the automotive industry are having a negative impact on industrial activity worldwide. New strict EU emission regulations will continue to create a difficult environment in the future. However, the service sector is proving to be a strong pillar of the economy. In Austria, tourism in particular continues to expand unabated.
 
Economic growth in Austria lost considerable momentum in recent months. A major reason is the current phase of weakness in the global trade cycle that weighs on exports and industrial output. Persistently favourable financing conditions, fiscal incentives and resilient consumer demand remain supportive to domestic business activity. After an increase of 1.7 percent in 2019, GDP is projected to grow by 1.2 percent in 2020 and 1.4 percent in 2021.
 
In 2018, the ongoing good economic state of the Austrian manufacturing sector led to an improvement in the unit labour cost position compared with the weighted average of all trading partners. Productivity rose more strongly than in the other countries, while labour cost development was in line with the average. This favourable development was largely determined by the labour cost relation to Germany and the other EU trading partners. Compared with non-European trading partners, the Austrian unit labour cost position deteriorated, partly due to an appreciation of the euro.
 
The current low level of interest rates is mainly due to the fact that the savings plans in Europe and Southeast Asia exceed the investment plans; the expansive monetary policy only strengthened this trend slightly. The savings surpluses are primarily the result of mass saving, which tends to curb consumption and force it into intermediation through the credit apparatus; this inevitably leads to problems of maturity and risk transformation as well as debt. They contribute to the instability of the system. Savings surpluses due to mass saving already occurred in the last quarter of the 19th century, but were eliminated by wars and inflation before they could pose more serious problems. Since 2000 at the latest, however, savings surpluses have been dampening consumption and growth; the economy's willingness to borrow is limited in view of the low growth rates, and national debt tends to be contained. This is unlikely to change much in the foreseeable future. The article shows the problems on the basis of the Austrian development over the last 180 years and discusses possible solutions.
WIFO Bulletin, 2019, 24(16), pp.143-152
Online since: 20.01.2020 9:00
 
Favourable labour market conditions and robust income growth strengthened demand for non-life insurance in 2018. In contrast, life insurance continued to suffer from low interest rates and the high liquidity preference of private households. With premiums growing by 5 percent, non-life and accident insurance exceeded expectations by far, and private health insurance continued its stable growth path with +4.2 percent. The premium volume in life insurance, on the other hand, prolonged its decline at –3.7 percent. In comparison with the nominal gross domestic product, the premium volume of the entire private insurance sector developed modestly; insurance penetration in Austria fell to 4.5 percent of GDP and it is thus far below the European average of 7.6 percent. Current WIFO surveys show that this trend will continue – at a lesser pace – over the next two years. For the first time, the long phase of low yields on fixed-interest securities caused visible losses in the revenue from capital investments. In total, the financial result was about one tenth lower than in the previous year.
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