Winter Forecast of the Austrian Economy 2021–2023

Upswing continues despite inflation and coronavirus risks

With an expected growth of 4.3%, the recovery of the Austrian economy from the coronavirus shock suffered in the previous year has been faster than expected. In the next two years, the Austrian economy should remain on a solid growth path and GDP is projected to increase by 4.2 % and 2.6 %, respectively. This forecast rests on the assumption that the coronavirus containment measures can be phased out soon and that no further lockdowns will be necessary. In recent months the inflation rate has risen strongly, mainly driven by energy prices. The peak of the price increase is likely to be reached at the end of this year. For the annual average of 2022, the inflation forecast has been raised to 2.8 %. In 2023, it should decline to around 2 %. Starting from 8.1 % in the current year, the unemployment rate could fall to 7.1 % and 6.9 %, respectively, in the coming two years. The institute welcomes the reduction of the tax burden on labour introduced by the tax reform to become effective in 2022, but structural reforms in the public sector are still lacking.

IHS Economic Forecast