According to the latest forecasts, Austria’s economy will shrink the third year in a row instead of overcoming the recession. The renowned business institutes WIFO and IHS are expecting a decline in economic output of around 0.3 percent this year. In December, they had predicted growth of around 0.7 percent.
Austria has been in the longest recession since the end of World War II. According to the economists, the decline in industrial production in the euro area continues to radiate to the Alpine country. The announced US tariffs on European goods and the austerity measures of the Austrian government also had a negative impact on the forecasts.
The experts see a glimmer of hope in the German billion dollar package for defense, infrastructure and climate protection. Because Austria and Germany are economically closely interlinked. Almost 30 percent of all Austrian exports go to the northern neighboring country. Wifo boss Gabriel Felbermayr and IHS boss Holger Bonin expect to recover Austria’s economy from mid-2025. For 2026, they predict growth of more than 1 percent.