The second lockdown interrupted the recovery of the Austrian economy.
Bank Austria's economic indicator fell to minus 2.5 points in November. It was the sharpest monthly decline since the first lockdown month of April. Bank Austria chief economist Stefan Bruckbauer describes that Austria is heading for a new recession over the winter. However, the economic slump is likely to be far less severe than in the first half of the year.
For the fourth quarter of 2020, Bank Austria expects a significant decline in gross domestic product (GDP), which is determined by developments in the service sector. For the year as a whole, the bank is anticipating a GDP decline of more than seven percent. After a weak start to the year, however, there should be a sustained, strong recovery in the second half of the year.
You should be open to the pre-crisis level in the first half of 2022.
However, the coronavirus development remains a major economic risk. The current high propensity to save among Austrians and the uncertainty among consumers are likely to slow the recovery. In addition, a real wage increase is not expected in the coming year, and income losses due to short-time work and unemployment would be a burden. Companies are underutilized and have liquidity problems.
Inflation should remain at 1.5 percent in 2021, as in the 2020 annual average, before increasing to 1.9 percent in 2021. In the euro area, an inflation rate of only 0.7 percent is expected for the coming year; in 2022 it is expected to rise to 1.6 percent.
