Growth at sedate pace

UniCredit Bank Austria AG
Fri, 04/09/2015

Economic recovery in Austria remains hesitant, says UniCredit Bank Austria’s Chief Economist.                                                                                 

After the slight economic slowdown at the end of the first half of the year, things are now looking a bit more positive. However, the domestic economy has not yet managed to speed up growth from the second quarter. Nevertheless, prospects of a more substantial revival in the Austrian economy are still intact.

“In the coming months, we expect the Austrian economy to pick up gradually, enabling quarterly growth rates of up to 0.5% by the end of the year. The current improvement in the economic climate in industry is a small taste of what is to come,” said Stefan Bruckbauer, UniCredit Bank Austria’s Chief Economist.

Order books are starting to fill up, particularly due to more demand from abroad and a satisfactory business situation, thus putting Austrian industry in a noticeably more positive mood at the start of the second half of the year. Austria’s industry sentiment exceeded the long-term average in July, as has already been the case in Europe for a while. For the first time in a year, Austria’s industrial companies, which are predominantly exporters, are now feeling confident.

Support from the European markets

Although foreign trade failed to stimulate growth in the first half of 2015, the Austrian economy should nevertheless be better able to take advantage from the increasing support coming from Europe over the coming months, particularly given that the agreement on a further Greek bailout has cleared one cloud from the horizon. Most countries in the Eurozone are recovering rapidly, enabling economic growth of 1.4% to be forecast for 2015. In the wake of this recovery, the growth prospects for Central Europe’s growth markets are improving by an average of over 3%. The Austrian economy should be able to benefit from this trend. The USA’s solid economy, which is growing by around 2.5%, is also providing support, together with the fact that the now weaker euro allows a competitive advantage to be exploited.

In addition to the ongoing Ukraine crisis and the recession in Russia, concerns about the Chinese economy have the strongest negative impact at the moment. Taking all effects on Austrian exports into account, UniCredit’s economists are forecasting a positive second half of the year overall.

However, the support for the Austrian economy provided by foreign trade will be more subdued in the second half of the year than had previously been thought a few months ago. This is less a result of the regional shift in demand between growth markets and industrialised nations and more due to the fact that the expected recovery in Europe is being driven heavily by consumption rather than primarily by investments. With its traditional strengths lying in manufacturing capital goods and equipment, the Austrian export economy is benefiting relatively modestly.

UniCredit’s experts are still expecting GDP to rise by 0.9%. Bank Austria believes that the difference between Austria’s growth and the Eurozone’s – likely to be 1.4% – is a result of the structural pattern of the current upturn in Europe and is not due to a weakness of the Austrian economy caused by lower competitiveness.


Tina Fischer
Senior Relationship Manager Austria
Global Security Services Austria