Economic Activity Moving Closer to its Potential in the Medium Term. Projections for the Austrian Economy from 2003 to 2008

In the course of 2004, cyclical stimulus from the USA will lead to a recovery also in Europe that should continue over the whole projection period. The major risk derives at present from the high euro exchange rate which may hold back the momentum of the European economy. Under such external conditions, Austria's GDP, at constant 1995 prices, is expected to expand by 2.3 percent p.a. from 2003 to 2008. Growth should thus exceed somewhat the annual pace of 2.1 percent recorded over the period 1997-2003. From 2001 to 2003, activity in Austria was constrained by cyclical sluggishness abroad. Over the years to come, with the expected improvement in global economic conditions, it should be able to move towards its full potential. Rising labour supply in Austria will provide sufficient scope in this regard.