Austria: Economy slows to a halt in Q2
According to a preliminary reading, the Austrian economy stagnated on a seasonally adjusted quarter-on-quarter basis in the second quarter, falling short of the 0.2% expansion recorded in Q1 and the Euro area average of 0.3%. On an annual basis, GDP was also flat in Q2, though this still marked an improvement from the previous quarter’s 1.3% contraction and was the best result since Q1 2023.
Domestically, the quarterly deterioration chiefly reflected a contraction in household spending, which fell 0.5% in the second quarter (Q1: +0.8% s.a. qoq); a higher unemployment rate in the quarter likely weighed on household budgets. More positively, public expenditure bounced back, growing 1.4% in Q2 (Q1: -0.5% s.a. qoq), and fixed investment rebounded 0.1% after contracting 2.1% in the previous quarter.
On the external front, exports of goods and services contracted 2.7% in Q2 (Q1: +2.6% s.a. qoq), marking the worst result in a year. Meanwhile, imports of goods and services also deteriorated, contracting 3.2% in Q2 (Q1: +3.3% s.a. qoq), marking the worst reading in four years.
Our panelists expect sequential growth to return in the third quarter as receding price pressures and a lower unemployment rate support private spending. Over 2024 as a whole, our Consensus is for the economy to post a shallow rebound. That said, a protracted malaise in the German manufacturing sector is a key downside risk.
Erste Bank’s Maximilian Möstl commented:
“For 2024, we expect growth of +0.2%. This is primarily due to lower than expected consumer spending and gross fixed capital formation expenditure in the first two quarters of the year. […] In contrast to previous years, we do not expect foreign trade to make a positive contribution to GDP, due to the subdued development of exports.”