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. Broad fiscal support measures throughout 2024 and limited budget deficit reduction measures will keep Austria on a slow fiscal consolidation path. --Austria?s strong tourism inflow will counterbalance slowdowns in other sectors, leaving Austria with a real GDP growth of 0.85% in 2024. --This will leave the general government balance in deficit over the forecast horizon through 2027 and delay a more resolute budgetary consolidation. -- The labor market will remain robust through 2027, keeping unemployment low. --Government?s Interest payments will only start materially increasing from 2024, but will remain relatively low in an international comparison.

...An uptick in private consumption and strong tourism sector performance will support Austria's economic recovery in 2024. This will leave real GDP growth at about 0.9% in 2024, before reaching 1.7% by 2025. Budgetary consolidation remains slow because of prolonged energy-cost-relief measures. We expect the general government deficit to average 2.2% of GDP over 2024-2027 as some government's energy support measures, such as the electricity cost subsidy, have been extended until year-end 2024. We don't expect any material changes in the overall fiscal policy stance following the 2024 general elections. In our view, the authorities have a long track record of prudent policymaking. However, the longer-term policy agenda remains less certain and there could be some budget amendments....

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