No Recovery in Sight: Austria's Economy Continues to Stagnate
Although business sentiment has recently brightened slightly, pessimism still prevails according to Wifo economist Stefan Schiman-Vukan.
A combination of economic policy measures has caused electricity prices to rise by about a third since the beginning of the year, which - together with a traditionally stronger price increase in services - has led to higher inflation than in the Eurozone.
Unemployment in Austria Rises
The weak economy is noticeable in the labor market: Unemployment is rising, and job vacancies and employment levels in the private sector are declining. On the positive side, employment increases due to the gradual raising of the retirement age for women since 2024. According to Wifo, unemployment and displacement effects are low in times of labor shortages. The unemployment rate for women over 60 has aligned with the average for all women and remains significantly below that of men of the same age.
Internationally, a heterogeneous picture emerges: In the USA, a significant increase in tariffs on EU imports is burdening economic growth and driving inflation. The high interest rate level has not been reduced despite the economic slowdown. In China, overproduction combined with pressure on the real estate markets is causing prices to fall, while the trade surplus supports growth.
Economy in the Eurozone Stable
In the Eurozone, the economy was largely stable in the first half of the year. Unemployment remained low, and inflation met the target of the European Central Bank. According to Wifo, the key interest rate is now at a neutral level and was not further reduced recently.
Schiman-Vukan emphasized that raising the retirement age is an effective tool to increase employment. "In times of labor shortages, displacement effects are low," said the Wifo economist. The positive development in the labor market for the older age group is an important stabilizing factor in an overall weak economic situation.
"Anyone who wants people to work longer must first and foremost provide them with the jobs to do so," demands Ines Stilling, Head of Social Affairs at the Chamber of Labor (AK). It is necessary for people to remain healthy until retirement. Everything else is a pseudo-debate. The companies are especially called upon: "An increase in the statutory retirement age means longer unemployment or illness for many - because even now, two-thirds of companies do not hire people over 60."
(APA/Red)
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