Economy growing again

By Lisa Chapman

The economy has grown for the first time in more than a year, the Institute for Economic Research (Wifo) said today (Fri).

It said the economy had resumed growth in the third quarter of this year � 0.9 per cent compared to the previous quarter - for the first time since the second quarter of 2008.

Wifo added Austria had had negative growth of 2.4 per cent year on year as of the end of the third quarter compared to minus 5.3 per cent at the end of the second quarter.

The think tank said the resumption of overall growth had derived from strong growth in exports and the construction industry but warned that it was too early to talk about a resumption of sustainable growth.

Wifo expert Marcus Scheiblecker said: "The positive impact of domestic and international stimulus programmes is becoming apparent."

He said production levels at the end of the third quarter had been lower than a year earlier, adding that exports had increased by 1.4 per cent from the second to the third quarter but had still been 15 per cent lower year on year at the end of the third quarter.

Domestic consumption remained stable and tax reform and low inflation had helped slow the growth of unemployment, the institute said. Scheiblecker also mentioned a 1.3 per cent increase in domestic investment from the second to the third quarter had contributed to the resumption of growth.

People�s Party (�VP) Finance Minister Josef Pr�ll said today the growth showed that the government�s anti-recession measures had worked. "We have steered the ship of state with quiet hands during the past crisis months. Tax reform has made consumption stable. The stimulus packages have had a positive influence on the economy and the labour market."

At the same time, however, he warned it would be "a mistake to talk about sustainable growth".

"The stimulus packages will continue to make their effects felt next year. Our core job next year will be to create the pre-conditions for sustainable and market-driven growth, which I have called Project Austria," he said.

�VP Economy Minister Reinhold Mitterlehner said 2010 would be "a key year" for the Austrian economy and he hoped Austrian exports would be able to increase their market share next year, especially in the Black Sea region.

The news comes just a day after Bank Austria (BA) economists warned that the economy would recover only slowly and lose steam early next year.

They said that growth would accelerate in the fourth quarter but would slow in the first quarter of 2010 because of a continued lack of investment and lower consumption burdening the labour market.

They said what growth there was at present derived from business restocking of depleted inventories that could not continue indefinitely and that weak investment was the result of lack of liquidity at many firms as orders dropped.

Austrian Times

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