COVID-19-Induced Recession Requires Extraordinary Economic Policy Efforts
The COVID 19 pandemic and the measures implemented to contain its spread resulted in a deep global recession. The Austrian economy contracted at a historically large rate in the first half of the year. If no major second wave of infections occurs, in 2020 as a whole GDP is projected to decline by 7.3 %. Next year, the economy should recover, and GDP should grow by 5.8 %. Due to the severe economic crisis, the unemployment rate is expected to increase from 7.4 % to 10.2 % this year. A decline to 9.2 % is forecast for next year. Inflation is expected to remain moderate at 1.0 % and 1.3 %, respectively. The deep economic slump and the necessary fiscal policy measures are weighing heavily on the public budget. In overcoming the crisis, economic policy should focus on strengthening the forces of growth, which would facilitate the necessary budget consolidation.