Investment in Austria
Austria - Investment
Economy grows at a faster pace than previously estimated
A second reading of national accounts data revealed that the economy grew at a faster pace than previously estimated in the first quarter of the year. Quarter-on-quarter growth was revised up to 0.4% from 0.3% (Q4: +0.3% quarter-on-quarter), while year-on-year growth was also revised up from 1.1% to 1.4% (Q4: +2.5% year-on-year, previously reported: +2.4% yoy).
The quarter-on-quarter reading was buttressed by robust domestic demand. Private and public consumption expenditure both rose by 0.4% in the quarter, compared to 0.3% and 0.5% respectively in Q4; household consumption shifted into a higher gear amid a noticeable drop in inflation and despite increased pessimism among consumers and weaker retail sales growth. Fixed investment growth also picked up (Q1: +0.8% qoq; Q4: +0.7% qoq), with particularly strong construction investment; a drop in vehicle investments, however, suggests that the automotive industry remained weak in the quarter.
Although the external sector performed better than previously estimated, momentum has been waning since midway through last year. Exports of goods and services rose 0.6% over the prior quarter in Q1, which was slightly down from the fourth quarter’s upwardly revised 0.7% growth rate (previously reported: +0.6% qoq); imports of goods and services, meanwhile, expanded 0.4% quarter-on-quarter as previously noted, down from the 0.5% expansion in Q4.
The Austrian economy is expected to continue growing at a resilient, albeit noticeably more moderate, pace this year. Firming domestic demand should support the economy in the face of a softer contribution from the external sector. Downside risks on the external side include the ongoing uncertainty over the direction of Brexit, lingering global trade tensions and slower growth in Europe.
Added to the external downside risks, however, is the political turmoil at home in the aftermath of the so-called “Ibiza scandal”. The debacle ultimately led to Chancellor Sebastian Kurz and his government being dismissed by a parliamentary no-confidence vote, with snap elections scheduled for early September. While it seems likely that Kurz’s People’s Party (OVP) might come out on top again, especially given his party was the clear winner in the recent European parliament elections, a prolonged period searching for a new government could weigh on confidence levels and drag on the economy. Moreover, planned fiscal stimulus is likely to be postponed, or could be cancelled in the event Kurz does not form the next government.
Although the research team at UniCredit noted that Sebastian Kurz’s party would likely win the legislative elections in September, it added that, “it is completely unclear with whom [Kurz] wants to and would be able to form a coalition.” Irrespective, the turmoil is unlikely to have a significant economic impact, other than the postponement of proposed tax relief measures, with UniCredit’s research team noting that the postponement should not present any serious fiscal risks “as Austria will fulfill the EU’s budget requirement in any case with its expected balanced budget in 2019”.
Inga Fechner, Austria economist at ING, largely agreed with the research team at UniCredit regarding the economic impact of the turmoil. Fechner, however, was more elusive about a Kurz victory in September, noting that, while he has a good chance to win, “it is too early to call the outcome […] Austrian politics never ceases to amaze”.
Met the why particular panelists project that the economy will grow 1.7% in 2019, which is unchanged from last month’s estimate. For 2020, the panel expects the economy to expand 1.6%.
Austria - Investment Data
|Investment (annual variation in %)||1.6||-0.7||1.2||3.7||4.9|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.04||0.11 %||Jun 13|
|Exchange Rate||1.13||0.65 %||Jun 13|
|Stock Market||2,949||-1.00 %||Jun 13|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
May 30, 2019
On 27 May, Austria entered unchartered political waters; for the first time in the country’s modern history has a chancellor (and his newly-installed technocratic government) been ousted from office by a Parliamentary no-confidence vote.
May 30, 2019
Consumers were neither pessimistic nor optimistic in May, with the consumer confidence index rising to the neutral zero-point mark in May from minus 3 in April.
May 29, 2019
A second reading of national accounts data revealed that the economy grew at a faster pace than previously estimated in the first quarter of the year.
May 28, 2019
Bank Austria’s Purchasing Managers’ Index (PMI) moved further south of the neutral 50-point mark in May, as the index fell to an over four-year low of 48.3 (April: 49.2), indicating weakening economic momentum in the second quarter.
May 24, 2019
Industrial output in Austria dropped 1.0% over the previous month in March, swinging from February’s upwardly revised 1.4% increase (previously reported: +0.6% month-on-month).