What are your predictions for 2016

OeNB is lowering its GDP forecast for 2016 and 2017

The forecasts for the next two years will each be reduced by 0.3 percent. Record unemployment is not expected to fall slightly until 2018.

The Oesterreichische Nationalbank (OeNB) is lowering its growth forecast for Austria's economy for 2016 and 2017 compared to December by 0.3 percentage points to 1.6 percent and 1.5 percent respectively expected. The tax reform and refugee spending have a positive effect on gross domestic product (GDP) growth. "The economy is finally picking up," commented OeNB Governor Ewald Nowotny on the current forecast. In the past four years, economic growth in Austria has been less than one percent.

For 2016, the OeNB expects a national debt ratio of 84.5 percent, 82.2 percent are expected in 2017 and 80.9 percent in 2018. An acceptance of the bond buyback offer by all creditors of the Hypo wind-down company Heta would, according to Nowotny Lower the national debt ratio by more than two percentage points. The debt level of the Republic of Austria forecast for this year is "artificially high" due to the cash holdings of Heta.

Debt ratio could go down

In its forecast, the National Bank (OeNB) theoretically assumes that Heta debt will remain constant. If the creditors accept the haircut including the non-payment of the liabilities, the debt ratio would be 78.5 percent in 2018, according to the forecast of the OeNB.

According to the OeNB forecast, record unemployment will not fall despite the higher economic growth. In 2016 and 2017, the unemployment rate is expected to rise to 6.0 and 6.1 percent according to the international definition. Not until 2018 is the unemployment rate expected to drop slightly by 0.1 percentage points to six percent. The increasing participation of recognized asylum seekers and migrants as well as women and older workers increases the labor supply.

Inflation higher from 2017

For 2016, the OeNB expects an inflation rate of one percent and for 2017 a significant increase to 1.7 percent and 2018 to 1.9 percent. The oil prices, which have recently risen again, will have a significant impact on inflation from the second half of the year.

(APA)