Economic growth in Austria will grow slightly slower than forecast in 2021, according to research by the WIFO institute, as supply shortages and bottlenecks were hampered by a general Covid lockdown.

The current economic outlook findings by the WIFO Austrian Institute of Economic Research show that following 4.1% growth in 2021, GDP will grow by 5.2% next year and 2.5% in 2023.

"In 2022, those sectors that were affected by regulatory restrictions in 2021 will grow strongly, especially retail trade, accommodation and food services, and other consumer-related services. The upswing in industry will continue as supply bottlenecks gradually dissipate. However, the catch-up potential here has already been exhausted", said Stefan Ederer, author of the current WIFO forecast.

The robust economic recovery in Austria during Spring and Summer of this year is decelerating in the second half of 2021, with GDP expected to contract in Q4, whilst the economy is forecast to rally quickly in 2022 on the easing of Covid restrictions. Strong growth is expected next year as a whole, then moving to moderate growth in 2023.

Furthermore, the promising development within the jobs market will continue, with employment set to rise and unemployment to drop to below the pre-pandemic level in 2022.

In regard to commodity prices, they are set to stay high well into next year, and then gradually decline due to the global demand slowdown, stifling domestic inflation. In 2023, Austrian inflation is forecast to move closer to the European Central Bank's target of 2%.

This forecast is founded on the assumption that the easing of restrictions in the country unveiled in mid-December will be introduced accordingly. It is also believed that mandatory vaccines will spark a rise in the vaccination rollout, to enable the impact on the economy from the restrictions for the unvaccinated to diminish.