Slower global growth and high uncertainty weigh on domestic economy
In line with the slowdown in economic activity in the euro area, the strong growth of the domestic economy slowed markedly over the course of the year. The high level of uncertainty surrounding global growth has also showed dampening effects. After 2.7 % in this year, the Institute expects the Austrian economy to grow by 1.7 % in 2019 and 1.6 % in 2020. Inflationary pressure should be moderate at around 2 %, while unemployment should remain relatively high at about 7 ½ % . The possibility of a hard Brexit, an escalation of trade tensions, and uncertainties related to the global economy are significant sources of downside risk to the forecast. Deep structural reforms are key to strengthen the growth potential of the Austrian economy and to increase its resilience to international economic shocks.