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Subdued Economic Recovery given Necessary Fiscal Consolidation: Economic Outlook for Austria from 2010 to 2012 (June 2010)

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Monetary Policy & the Economy Q2-10 – Subdued Economic Recovery given Necessary Fiscal Consolidation 6 MONETARY POLICY & THE ECONOMY Q2/10 Subdued Economic Recovery given Necessary Fiscal Consolidation Economic Outlook for Austria from 2010 to 2012 (June 2010) 1 Summary According to the OeNB’s June 2010 economic outlook, real economic out- put is projected to grow by 1.6% in Austria in 2010, after having contracted by 3.4% in 2009. The outlook is even brighter for the years ahead, with a significant acceleration of growth pro- jected for 2011 (1.8%) and especially for 2012 (2.1%). Thus, the economic outlook has improved by 0.4 percentage points for 2010, and by 0.2 percentage points for 2011 over the December 2009 projections, largely thanks to a more rapid recovery of world trade. Real output growth expected for 2012 is in line with Austria’s long-term average. The recovery of the Austrian econ- omy is fueled by the rapid upswing in world trade that has been observed since the summer of 2009. Conse- quently, the OeNB now expects the annual growth rate of Austrian exports to accelerate to 4.6% in 2010, which is still moderate compared with previous recovery episodes. Looking ahead, ex- port growth is, however, projected to reach 5.4% in 2011 and 6.1% in 2012. With regard to business investment, plummeting export demand, tighter financing conditions and the general uncertainty amid the crisis had caused investment in plant and equipment to contract by 8.5%, and gross fixed capital formation as a whole by 7.5% in Christian Ragacs, Klaus Vondra1 JEL classification: C5, E17 Keywords: forecast, Austria Editorial deadline: May 27, 2010 1 Oesterreichische Nationalbank, Economic Analysis Division, [email protected], [email protected] With contributions from Friedrich Fritzer, Ernest Gnan, Walpurga Köhler-Töglhofer, Peter Mooslechner, Lukas Reiss and Alfred Stiglbauer. Growth of Real GDP (Seasonally and Working Day-Adjusted) Chart

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