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18.08.2006

BA-CA Economic Indicator:
Economic Indicator Hits Highest Level Since 2000

  • Only minor slowdown in growth after good second quarter as expected
  • Growing consumer confidence should boost consumption
  • Austrian economy set to grown by nearly 3 per cent this year

The Bank Austria Creditanstalt (BA-CA) Group Economics economic indicator rose again in July to 3.8 per cent, the highest level seen since 2000. "After a strong second quarter, Austria's economy has not yet lost speed in the third quarter," says Stefan Bruckbauer from BA-CA. Industry sentiment is still relatively good, both in Austria and in the euro zone as a whole. "Exports remain a key pillar of economic growth," Bruckbauer added.

The indicators are now also pointing to increasing domestic demand, and the economic experts at BA-CA feel that the disappointing level of private consumer demand seen again in the second quarter may finally pick up in the third quarter. Consumer confidence improved in July to a level not seen since 2002. "The higher consumer confidence may be enough to push consumption growth over 2 per cent," said Bruckbauer. However, the BA-CA economists point out that consumption has been growing at a real rate of roughly 2 per cent for a year already, a level that has not been seen since 2000 and that is just under the average for the 1990s. "Even though private consumption disappointed by not gaining speed in the second quarter, its rate of growth over the last twelve months corresponds to the average for the last fifteen years," said Bruckbauer, "Nevertheless, it is lagging behind the overall economic trend." BA-CA expects that GDP growth may reach nearly 3 per cent this year, the highest level since 2000.

BA-CA economists are expecting economic growth to slow slightly in 2007, but a real downturn does not seem likely at this point. "We will not be able to maintain this summer's high levels of growth next year. But growth should still come in at around 2 per cent, in line with the average of recent years," says Bruckbauer. In spite of the expected global economic cooldown next year and a more restrictive monetary policy in Europe and the USA, economists at BA-CA say that economic growth could still beat the expectations in 2007.

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Enquiries: Bank Austria Creditanstalt Economics Department
Stefan Bruckbauer, Tel. +43 (0)5 05 05 Ext. 41951
E-mail: stefan.bruckbauer@ba-ca.com