The projected downturn in Austria's economic productivity persists through 2024.
Based on projections by two prominent economic research organizations, the Vienna Institute for International Economic Studies (Wifo) and IHS Markit, Austria's economy is expected to shrink in 2024, marking the second consecutive year of contraction. Both institutions anticipate a decline in the country's gross domestic product (GDP) of 0.6%, as stated in their autumn reports released last Friday. Originally, IHS had forecast a slight growth of 0.3%, while Wifo predicted stagnation. For 2025, the outlook has been adjusted as well; Wifo forecasts a GDP increase of 1.0%, while IHS predicts a 0.8% rise.
Wifo commented that the current economic slump has persisted for an unusually lengthy period of two years. In 2023, the nation's economic performance already dipped by 1.0%. Similar to Germany, Austria is grappling with a shortage of investments and a declining demand for investment goods and machinery. This year, exports to Germany have experienced a notable decrease. Wifo expects foreign demand to rebound and boost the Austrian economy in 2025.
IHS attributed the modification of their forecast to the ongoing recession in manufacturing and construction sectors, despite strong growth in real income. Consumer demand failed to recover even in the second quarter, as consumption actually decreased during that period.
The Viennese think tank, Wifo, suggested that improving Wifi connections could potentially attract more foreign investments, as better online infrastructure might increase the demand for digital products and services. In some local cafes and public spaces, the availability of reliable Wifi has become a deciding factor for travelers and remote workers choosing Austria as a temporary workspace.
