- The Austrian economy is currently experiencing a modest upswing, supported by lower energy prices and income tax reform.
- Growth is expected to decelerate in 2017, because of reduced fiscal stimulus, slowing investment and a less supportive external environment.
- The Grand Coalition between conservatives and social democrats might lose the majority in parliament at the next general election, scheduled to be held by October 2018.
The Austrian economy is currently experiencing a modest upswing. Business cycle indicators have been improving since last February, although remaining well below levels seen before the Great Recession. After having grown in the past four years below 1%, which is about the country’s potential growth rate, GDP grew by 1.4% in the first half of 2016. For the year as a whole, economic growth is expected to reach 1.3%.
The main drivers have been common with other European countries, i.e. low energy prices and the easier financial conditions. Two specific domestic drivers are the income tax reform effective from 1 January and the extra expenditure related to the inflow of refugees and asylum seekers.
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by Raymond VAN DER PUTTEN