Economy Contracting

The Austrian economy grew at a seasonally and working day adjusted quarter-on-quarter rate of 0.4 percent in real terms in the second quarter of 2008, according to WIFO's flash estimate. In year-on-year terms, GDP growth was 2 percent. The marked deceleration in growth from previous quarters reflects the impact of the global eco-nomic downturn on export activity and industrial production. Consumer demand cannot recover on the back of high inflation and declining real incomes. The construction sector and tourism, on the other hand, stabilise the economy. Labour market conditions remain very favourable, compared with last year, but there are already clear signs of a trend reversal.