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02. 10. 08. - 16:00

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02. 10. 08. - 16:00

Alarm bells ring over Austrian economy

Leading Austrian think tanks have lowered their predictions for economic growth in Austria in 2009.

The Institute for Economic Research (Wifo) and The Institute for Higher Studies (IHS) have based their new predictions on the worsening world and European economic and financial situations.

Wifo have lowered its estimate from 1.4 to 0.9 per cent, and the IHS has lowered its estimate from 1.9 to 1.2 per cent.

The two think tanks have also lowered their June predictions of economic growth for 2008.

Wifo pegs it at 2.0 per cent, down from 2.3 per cent, and IHS also puts it at 2.0 per cent, down from 2.2 per cent.

Both think tanks said that the US banking crisis would have little impact on Europe but that the economic situation on the continent would get worse.

Wifo chief Karl Aiginger said that he was "cautiously optmistic about lower inflation next year but would issue a serious storm warning about the general economic situation."

The think tanks' lower forecasts for growth in 2009 may meet with a governmental response.

Economics and Labour Minister Martin Bartenstein said a week ago that growth of less than one per cent in 2009 would constitute an alarm and make a government package necessary in response.

Bartenstein has already said he does not want to be a member of the new government, so it is uncertain whether it will take any action in response to the lower growth estimates.

David Rogers

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