Slow Growth in the Medium Run. Forecast for the Austrian Economy up to 2006

For the coming years, WIFO envisages the recovery in Europe, and specifically in Austria, to be rather sluggish in nature. It will be primarily the global economy which can be expected to deliver the requisite momentum for an upswing, which, however, is subject to considerable risks. Both in the EU average and in Austria, the recovery will stay within modest bounds; on average, real GDP will grow by just 2 percent p.a. over 2001-2006 (as against some 2.5 percent in 1996-2001). In Austria, demand in the consumer goods and construction sectors will not keep pace with demand in the export and plant and equipment sectors. Employment will rise perceptively, especially in 2004-2006. Unemployment, on the other hand, will decline at an inadequate rate, so that by 2006 the jobless rate could stand at 6.3 percent of the dependently employed or 3.7 percent of the economically active population as defined by Eurostat. The public financing deficit is set to fall to some 0.8 percent of GDP by 2006, helped by the economic recovery. Designing a proper budgetary structure as well as innovation and education policies will constitute major challenges for economic policy.