Country Forecast Austria
The Economist Intelligence Unit, June 2012, Pages: 46
The Economist Intelligence Unit believes that the current coalition of the Social Democratic Party (SPÖ) and the Austrian People's Party (ÖVP) will continue until the next election in 2013. We expect a new grand coalition to be formed, possibly with the support of the Greens, because the largest opposition party, the Freedom Party (FPÖ), is considered too extreme to join the government. Our forecast is that the budget deficit will stand at 3.3% of GDP in 2012, but fall to 3% in 2013 in accordance with the EU's Stability and Growth Pact. The government will be prepared to protect the banking sector, which could be vulnerable to the financial crisis through exposure to central and eastern Europe. We expect real GDP growth to slow from 3% in 2011 to -0.1% in 2012 and 0.8% in 2013, then recover to 1.7% in 2016. The break-up of the euro zone represents a significant downside risk of severe recession.
The government's lobbying and transparency law was debated in parliament. Amendments reflecting the opposition's criticism are likely.
Voter dissatisfaction with the established parties remains high. The FPÖ and the Pirate Party are expected to continue to benefit from the protest vote.
Country Forecast Austria
Austria at a glance: 2012-16
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Austria--highlights: Political outlook
Austria--highlights: Demographic outlook
Austria--highlights: Business environment outlook
Austria--highlights: Economic outlook
Austria--highlights: Market opportunities
Austria--highlights: Long-term outlook
Fact sheet
Political outlook: Political forces at a glance
Political outlook: Political stability
Political outlook: Political and institutional effectiveness
Political outlook: Election watch
Political outlook: Key players to watch
Werner Faymann (SPÖ)
Michael Spindelegger (ÖVP)
Heinz-Christian Strache (FPÖ)
Eva Glawischnig (Greens)
Political outlook: International relations
Demographic assumptions
Austria's population will age as it continues to grow
Focus is on boosting labour force participation among older workers
Business environment outlook: Business environment rankings
Austria's overall score increases marginally
Business environment outlook: Austria's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure
Business environment outlook: Macroeconomic environment
The macroeconomic environment will suffer in the first half of forecast period
Business environment outlook: Policy towards private enterprise and competi
Gradual simplification of regulations on the policy agenda
State assets, especially stakes in banks, may be sold later in the forecast period
Business environment outlook: Policy towards foreign investment
Foreign investment will continue to be welcome
Business environment outlook: Foreign trade and exchange controls
Liberalisation of trade in telecoms services under way
Financial integration received setback
Business environment outlook: Taxes
Deficit reduction will be funded 60% by savings and 40% by taxes
Business environment outlook: Financing
Greatest risks to banking sector come from exposure to eastern Europe
The expansion of Austrian banks into eastern Europe will resume in 2012-16
Business environment outlook: The labour market
Business environment outlook: Infrastructure
Major new construction projects have been put on hold and may be cancelled
Economic forecast: Policy trends
Economic forecast: Fiscal policy
Economic forecast: Monetary policy
Economic forecast: International assumptions
Economic forecast: Economic growth
Economic forecast: Sectoral trends
Economic forecast: Inflation
Economic forecast: Exchange rates
Economic forecast: External sector
Economic forecast: Foreign direct investment in Austria
Stocks and flows
Origin and distribution
Determinants
Impact
Potential
Market opportunities: Market outlook
Household spending will stay subdued, despite reforms for purchasing power
Market opportunities: Consumer expenditure
Market opportunities: Social indicators and living standards
Long-term outlook: The long-term outlook
Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth
Data summary: Global outlook
Data summary: Gross domestic product, current market prices
Data summary: Gross domestic product, at constant prices
Data summary: Gross domestic product by sector of origin
Data summary: Growth and productivity
Data summary: Economic structure, income and market size
Data summary: Fiscal indicators
Data summary: Monetary indicators
Data summary: Employment, wages and prices
Data summary: Current account and terms of trade
Data summary: Foreign direct investment
Data sources and definitions
Global data
Domestic data
Abbreviations
Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues
Indicator scores in the business rankings model
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