After four years of slow economic growth, the Austrian economy is expected to expand. Austria’s economy has been on a rather flat growth path since 2012, but the growth rate is projected to pick up from 0.7 % in 2015 to around 1½ % in 2016 and 2017. This acceleration is expected to be driven by private consumption and housing investment. Investment activity has been sluggish, but is expected to pick up due to improved confidence, favourable financing conditions and the need to renew equipment. The unemployment rate is expected to stay contained at around 6 %. Inflation should return to almost 2 % in 2017 as the dampening effect of energy prices fades. The tax reform and additional expenditure on refugees and migrants add pressure to the fiscal outlook. The headline deficit of 1.6 % in 2015 is nonetheless projected to stabilise at 1.7 % in 2016 and 2017. Public debt increased in 2014-2015 due to the impact of financial sector measures, but is projected to fall to 84 % of GDP in 2017.
Austria is experiencing no macroeconomic imbalances. Austrian banks' exposure abroad and foreign currency loans imply a potential for adverse spill-overs, also in view of bank capital positions and profit prospects. However, banks' foreign exposures have been reduced while improved capitalisation and risk reduction measures are expected gradually to support the banking sector's lending capacity. The restructuring of financial institutions has had an impact on public finances but is now advancing without the need for additional public support. Supervisory measures have strengthened the risk-bearing capacity and resilience of the domestic banking sector and improved the local funding base and asset quality of operations abroad. Export market shares have deteriorated but are stabilising after years of losses.
Read a complete analysis of Austria's economy in the country report 2016 [2 MB]
2015 recommendations in brief
The Commission has made four country-specific recommendations to Austria to help it improve its economic performance. These are in the areas of: public finances, taxation and pensions; labour market and education; services; financial sector.