“It is the deepest recession in Austria since the Second World War. The decline in economic output will be much stronger this year than in the financial market and economic crisis of 2008/09.” The heads of the Economic Research Institute (Wifo) and the Institute for Advanced Studies (IHS), Christoph Badelt and Martin Kocher, found clear words yesterday in their quarterly economic forecast.
Both economists expect an economic slump of around seven percent this year due to the corona crisis. However, the low point has already been passed and a slight recovery can be seen. The forecasts by Wifo and IHS are subject to the condition that no second major wave will flare up. The longer the economy would not be active, the more it could be permanently damaged, according to Badelt and Kocher. The uncertainty persists. “There has never been a situation like this, not even for us as economic researchers. This crisis is unique,” said the Wifo boss.
The closure steps triggered both supply and demand shocks. On the supply side, material goods production as well as gastronomy, accommodation and transport came under pressure. Demand has shown a reluctance to consume and invest.
The recession will be “deep but short”; it is expected to be limited to two quarters, as the economists said. The pre-crisis level will not be reached by the end of 2021.
Badelt and Kocher expect the economy to recover in the coming year. GDP is expected to grow by 4.3 and 5.8 percent respectively. Exports, imports and consumption should pick up again, and the situation on the job market should ease somewhat. A global forecast is difficult “due to a lack of experience, especially in situations like this”.
Blümel: “A snapshot”
For Minister of Finance Gernot Blümel (ÖVP), the forecast economic downturn of around seven percent is “not a massive surprise”. It is a “snapshot. I hope it will improve by the end of the year”. The prerequisite is to prevent a second wave. (Rome)
