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IHS confirms economic forecast

The Viennese Institute for Advanced Studies (IHS) has decided to keep its prediction for the domestic economy unchanged.

IHS experts said in December Austria’s gross domestic product (GDP) would edge up by 0.8 per cent from 2011 to 2012. Only a few months earlier, the Viennese research group claimed that an improvement of 1.8 per cent was doable.

Now Austria’s other leading economic research organisation, the Institute for Economic Research (WIFO), announced that GDP declined by 0.1 per cent from the third to the fourth quarter of 2011. WIFO said on Wednesday that the Austrian economy had the potential to grow by 0.4 per cent in 2012. It explained that the domestic economy may have done 3.1 per cent better in 2011 than in the year before.

IHS announced yesterday (Thurs) that the economic turmoil in Europe and the various budget consolidation packages federal governments across the continent passed recently would not seriously affect the Austrian economy. IHS said it decided to leave its forecast for 2012 unchanged at 0.8 per cent. Only a serious crisis in Italy could worsen the Austrian economy’s performance significantly, according to the Vienna-based economic research organisation.

Italy’s new government agreed on a large number of efficiency measures and cutbacks to lower the sky-high state debt. The country’s credit rating was downgraded from A3 to A2 by US American rating agency Moody’s on Monday. Moody’s also changed the outlook on both the Italian and the Austrian economy from stable to negative but decided not to downgrade Austria from the best-possible credit rating of AAA. The agency also issued negative outlooks on the economy of seven other European Union (EU) nations on the same day. Spain, France and Slovenia are among the affected countries.

Italy is the second-most important partner for the Austrian export industry. Only the value of Austrian products acquired by German companies is higher than the volume of exports of Austrian firms to Italy. The Austrian Economy Chamber (WKO) recently said domestic enterprises’ exports could rise in value by 12 per cent from 2011 to 2012. This would mean that products worth 127.3 billion Euros are shipped abroad this year. The figure would mean an all-time record and another boost for the Austrian industry which had to accept a decline of exports’ value of nearly 19 per cent from 2008 to 2009.

WIFO research shows that the domestic economy’s performance in the current quarter seems to resemble its development in the final three months of 2011. Private consumption inched up by 0.2 per cent from the final quarter of 2010 to the same time span in 2011 while exports dropped by 0.5 per cent.

Especially Austrian companies which supply the international automotive industry fared well between October and December, according to WIFO analysis. Only last week, Statistik Austria announced that the number of car registrations climbed by six per cent in Austria to 31,455 from January 2011 to the same month in 2012. Most of the vehicles sold and registered feature diesel engines (57.6 per cent), according to the research group.

Austrian car dealers sold more vehicles than ever before last year when 356,145 cars were acquired. The figure beats the previous annual record of 2010 by 8.4 per cent. Volkswagen (VW) ensured its reputation as Austrians’ favoured car brand. Around 65,000 VW models were sold and registered for use in Austria last year. Opel took second place in 2011, with Renault / Dacia in third.

Vienna Times

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