Austria

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Austria is a wealthy, open, and diversified economy, displaying resilience in the face of adverse effects from the Russia-Ukraine war. Extensive fiscal support measures will help prevent long-term economic scarring and a full-year recession in 2023. --The labor market remains robust, with vacancies close to a record high, which will keep unemployment low despite slowing domestic demand in 2023. --This will leave the general government balance in deficit over the forecast horizon and delay budgetary consolidation. --Economic risks are contained since dependency on Russian gas is decreasing and being mitigated by continuous diversification toward alternative energy sources and green investments. --Austria's external position

...Austria's economy will slow in first-half 2023, however, it should start picking up in the second half as energy rationing concerns ease and global demand improves. The current account balance will remain in surplus through the forecast horizon thanks to the contribution of the tourism sector and competitiveness of Austrian exports. Extensive energy-cost-relief measures will slow budgetary consolidation compared to S&P Global Ratings' previous publication. We now expect the general government deficit to average 2.3% of GDP over 2023-2026 as the government's energy support measures and structural investments increase, amounting to a combined 11% of 2022 GDP. We don't expect any significant changes in the overall fiscal policy following the 2024 general elections. In our view, officials have a long track record of prudent policymaking and setting aside differences between parties. However, the longer-term policy agenda remains less certain....

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