The Organisation for Economic Cooperation and Development (OECD) forecasts Austria's GDP growth to rebound to 0.2% in 2024 and 1.5% in 2025, driven by improved domestic demand.
This follows a contraction of 0.7% last year, according to the latest OECD Economic Survey of Austria.
The fiscal deficit, as a percentage of GDP, has decreased from its pandemic peak but remained relatively high at 2.6% in 2023. It is expected to stay stable at this level through 2025, without showing signs of improvement, MSN reports.
Inflation, which rose sharply due to a surge in energy prices and has extended to core services, is anticipated to decline from 7.7% in 2023 to 3.7% in 2024 and 2.9% in 2025.
Moreover, ongoing reforms aimed at enhancing productivity, promoting social mobility, and accelerating climate action would place Austria on a stronger growth trajectory and further elevate living standards, the report noted.
“Austria’s strong economy is set to recover from last year’s recession. Fiscal reforms, improving spending efficiency and pension sustainability, can help to boost the economy’s resilience to future shocks,” OECD Secretary-General, Mathias Cormann commented.
He went on to say: “Rebuilding fiscal space, boosting productivity by reducing barriers to private sector investment and upgrading digital infrastructure, improving social mobility through enhanced opportunities for women, socio-economically disadvantaged children and migrants, and accelerating climate action by increasing carbon prices and decarbonising transport and energy supply will help drive resilient growth in Austria.”
In addition to short- and medium-term spending cuts, fiscal policy must tackle long-term spending pressures. Expenses for pensions, healthcare, and long-term care are projected to rise significantly in the coming decades in Austria due to an ageing population.
There is also potential to improve the efficiency of healthcare spending by transitioning services from hospital care to strengthening outpatient care. Additionally, reallocating some labour taxes towards environmental taxes and recurrent taxes on property would promote sustainable growth.