Forecast of the Austrian Economy December 2020

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.

Link to the short version in English

IHS Economic Forecast