Economic output fell by 0.4 percent in the fourth quarter of 2024. Industrial production in the Eurozone suffers from weak demand; an improvement is not in sight. However, business surveys indicate a slowdown in the downward trend. The production index rose by 0.5 percent compared to the previous year and by 3 percent compared to December 2024. Industrial production increased by 0.8 percent year-on-year and by 4.2 percent compared to December 2024, according to Statistics Austria. Nevertheless, US tariff threats and the plans of the new government in the USA are weighing on economic sentiment.

First Positive Economic Data for Austria's Economy - Consumer Confidence Weakens

Austria's construction industry, on the other hand, seems to have reached the bottom. The more favorable interest rate environment and the expected easing of credit lending guidelines provide better conditions here, even though the production index for construction showed a decline at the beginning of the year. While Statistics Austria still reported significant declines in the areas of energy (-9.6 percent) and consumer goods (-15.3 percent) in January, there was an increase of 10.6 percent in the index for consumer goods.

Despite the recent decline in consumer goods, consumer demand developed positively last year: Real retail sales picked up again in the second half of 2024. Car registrations also increased significantly in recent months. However, this cannot disguise the weakening consumer confidence, which is burdened by fears about job security and numerous company insolvencies. On a more positive note, tourism developed well: After a record number of overnight stays in the summer of the previous year, a new high is also emerging for the current winter season.

Faster Approval Procedures and Deregulation

At the beginning of the year, as expected, the inflation rate rose again as the electricity price cap expired. Furthermore, fossil fuels became more expensive and the euro weakened. After a price increase of 3.2 percent in January, inflation rose to 3.3 percent in February according to the flash estimate by Statistics Austria. Although the unemployment rate increased significantly compared to the year, it stagnated in recent months. The number of employees rose in February compared to the previous month. However, this increase could not fully compensate for the jobs lost in January.

Economy Minister Wolfgang Hattmansdorfer (ÖVP) referred in a statement to the planned medium-sized business package, which includes faster approval procedures and deregulation. "Overregulation leads to losses: not only in competitiveness but also in prosperity and jobs," noted Hattmansdorfer. "Excessive regulations must therefore come to an end both nationally and at the European level."

(APA/Red)

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