New Wave of Infections Slows Economic Recovery
The COVID-19 pandemic and the necessary containment measures are shaping the economic development worldwide. The Austrian economy experienced a sharp slump in the first half of the current year. After a significant recovery in the third quarter, GDP should decline again in the fourth quarter due to the new lockdown. For 2020 as a whole, real GDP is thus expected to decrease by 7.5 %. With the assumed end of the health crisis by mid-2021, the economy should recover and grow by 3.1 % and 3.8 % in 2021 and 2022, respectively. The economic slump has led to a sharp rise in the unemployment rate to 9.9 % in 2020. The economic recovery is expected to enable a decline in the unemployment rate to 9.7 % and 8.7 % in 2021 and 2022, respectively. Inflation is predicted to be 1.4 % in 2020, a rather high rate in view of the economic slump. For the next two years the institute expects a slight increase to 1.6 % and 1.9 %. The budget deficit has risen sharply due to the necessary economic policy measures and due to the automatic stabilisers. Structural reforms are required to strengthen the sustainability of public finances.