Country Economic Forecasts > Austria

The Austrian economy continues to recover slowly, with the pace of growth in 2016 set to rise for the third successive year, driven by low interest rates, cheap oil and the pick-up in foreign and domestic demand. But growth will be modest compared with the long-term average. Our forecast shows GDP growing by just 0.8% in 2015, 1.2% in 2016 and then about 1.8% in 2017-19. Our forecast implies that 2016 will be another year of sub-trend growth for Austria, again lagging some way behind the expected Eurozone average of 1.8%.But sluggish demand and weak energy prices have kept downward pressure on prices, with headline inflation down to 0.6% in November compared with 1.5% a year earlier, helping to support demand. And upcoming tax reforms should raise disposable income and boost household spending. However, unemployment (5.6% in October) is still high by domestic standards, and the recent ECB bank lending survey shows that credit standards for non-financial firms are challenging.And exports are making only small gains. Despite the depreciation of the euro since mid-2014, we expect Austrian exports to grow by just 2.3% in 2016, before picking up to about 4.5% in 2017-19, helping to lift GDP growth in these years.