Austria: Economy records its fastest upturn in over two years in Q3
GDP returns to growth in sequential terms: According to a preliminary reading, the Austrian economy ramped up in the third quarter, expanding 0.3% on a seasonally adjusted quarter-on-quarter basis after stagnating in the second quarter. The reading marked the strongest result since Q2 2022, though it fell short of the Euro area average of 0.4%.
On an annual basis, the downturn in economic activity slowed to a crawl, with GDP falling 0.1% in Q3 (Q2: -1.2% yoy).
Broad-based recovery takes hold: Domestically, the quarterly upturn was broad-based and spearheaded by a sharp rebound in private spending, which rose at a near two-year high sequential clip of 0.5% in Q3 (Q2: -0.6% s.a. qoq); lower inflation and laxer financial conditions likely supported household budgets. Moreover, public consumption returned to growth, rising 0.5% in Q3 (Q2: -0.2% s.a. qoq). In addition, fixed investment dropped at a milder rate of 0.3% in Q3, following the 0.7% decrease logged in the previous quarter.
On the external front, exports of goods and services growth hit an over two-year high of 1.2% in the third quarter (Q2: -1.0% s.a. qoq). In addition, imports of goods and services rebounded, growing 1.7% in Q3 (Q2: -0.5% s.a. qoq). On an annual basis, economic activity contracted 0.1% in Q3, an improvement from the previous quarter’s 1.2% contraction and marking the best result since Q1 2023.
Growth to accelerate but remain muted: Despite Q3’s upturn and an expected further uptick in Q4, the economy is forecast to remain in the doldrums in 2024 as a whole. Moreover, our panel expects growth to remain below its pre-pandemic 10-year average in 2025 due to spillovers from persistent weakness in the German manufacturing sector.