The UniCredit Bank Austria Business Indicator provides an overview of the current economic situation in Austria.
Coronavirus halts stabilisation of Austrian economy
- The UniCredit Business Indicator drops slightly in February 2020, to 1.6 points; however, this figure fails to account for the full impact of the spread of the coronavirus
- Despite almost unabated optimism within the domestic economy in February, exports began showing the first signs of a renewed economic downturn
- Austria’s economic growth curve is set to follow a V-shaped course in the wake of the coronavirus and the containment measures implemented
- We are reducing our growth forecast for Austria for 2020 from 1.0 per cent to -0.6 per cent. Accordingly, a higher growth rate of 2.0 per cent instead of 1.3 per cent is expected for 2021
- Given this scenario, Austria’s economy is likely to enter a technical recession in H1, followed by a strong recovery in H2 2020
- Sustained issues in Europe beyond Q2 in relation to the virus and further tightening of precautions in other countries would see recovery delayed slightly
- The impact on the labour market is expected to be kept within manageable limits through reduced working hours and liquidity measures for businesses
- Inflation expectations in Austria have been reduced to below 1.5 per cent for 2020 following the drop in oil prices
as of 16 March 2020.