The Austrian economy tipped into recession in Q3, as consumption and investments declined, weighing on output for the second straight quarter.

GDP in Austria fell 0.6% between July and September, following a 0.8% decline in the second quarter, according to new findings published by the Wifo Research Institute on Monday.

In addition, private and government consumption dropped over 1%, whilst investments edged down 0.4% from the prior quarter.

Industrial output in Austria also fell 0.5% quarter-on-quarter, whilst construction lost 1.8%.

In terms of expenditure, household consumption fell 1.0%, surpassing Q2’s 0.3% decline. Meanwhile, the drop in gross fixed capital formation slowed to 0.4% from 2.4%.

Exports rose 2.4%, compared to the second quarter’s 2.4% decline, whilst imports increased 2.5% following a 1.0% fall in the previous three months.

On an annual basis, Austria’s GDP contracted 1.2%, marginally faster than the 1.1% fall in Q2.

High inflation and the impact of the war in Ukraine are hampering consumption in Austria, Bloomberg reports, along with its key export markets, including Germany and central and eastern Europe.

According to the Wifo Research Institute, Austria’s economy is forecast to contract by 0.8% in 2023 before making a 1.2% rebound in 2024. 

Elsewhere, producer prices fell for the third consecutive month in September in Austria, according to Statistics Austria.

Producer prices fell 3.8% annually, following a 2.4% drop in August and a 1.3% decrease in July. Meanwhile, producer price inflation rose to 0.4% from 0.3% month-on-month.

Inflation data for Austria is due to be published on Tuesday and will be closely monitored for a possible slowdown elsewhere in the region.

Initial GDP reports from around the euro area were varied, with Spain maintaining growth throughout the quarter, yet Germany revealed a contraction in Q3. “The challenges described by (Germany’s economy minister Robert Habeck) at the presentation of the autumn projection and in the industrial strategy continue to apply and are being worked on at full speed,” the country’s economy ministry said.