Financial Crisis and Spike in Commodity Prices Dampen Growth and Fuel Inflation

According to the June 2008 economic outlook of the Oesterreichische Nationalbank (OeNB), economic growth in Austria is projected to weaken compared with the economic boom years of 2006 and 2007 owing to the international financial crisis and the spike in commodity prices. Real GDP growth is projected to come to 2.2% in 2008 and then dip to a low of 1.7% in 2009 before climbing back to 2.4% in 2010. Compared with the OeNB December 2007 economic outlook, growth expectations for 2008 and 2009 were downgraded by 0.3 and 0.6 percentage points respectively. At 3.1%, inflation in 2008 is at a record high since 1993 but is projected to fall to 2.4% in 2009 and to 1.9% in 2010. Employment growth remains robust, with a further drop in unemployment to 4.2% anticipated for 2008.