Country Economic Forecasts > Austria

GDP in Q4 2015 was flat for a second successive quarter, resulting in growth of just 0.8% for the year as a whole. The pace of growth in 2016 is set to rise, helped by continued ultra-low interest rates, cheap oil and some pick-up in foreign and domestic demand. But the pace will be modest compared with the long-term average; we forecast growth of 1.2% in 2016 and then 1.8% a year in 2017-19. Our forecast implies that 2016 will be another year of sub-trend growth for Austria, again lagging well behind the Eurozone average.Survey data is mixed. The manufacturing PMI rose to 51.2 in January, up from 50.6 in December but still below the Q4 2015 average. This implies that, although output is rising, it still is some way off previous rates of expansion. The central bank's economic sentiment survey also paints a subdued picture of confidence.Private consumption, investment and government spending have all been lacklustre of late, and are likely to have remained so in Q4. But weak demand and falling energy prices will keep CPI inflation low; although the rate rose to 1% in December from 0.6% in November, we now forecast inflation of just 0.7% for 2016.