The new lockdown will temporarily weigh on activity, but GDP is projected to recover quickly, growing by 4.6% in 2022 and 2.5% in 2023. A significant rebound in global trade underpins investment growth. Private consumption is expanding as households lower their saving ratio. Supply bottlenecks and labour shortages are weighing on activity. The outlook remains highly uncertain and dependent on the evolution of the pandemic and the length of the new lockdown, especially in hospitality sectors. Inflation is projected to increase to around 3% in 2021 and 2022 but will moderate over 2023.
COVID-19 risks reinforcing long-standing vulnerabilities in the labour market such as digital skill gaps, diverging career trajectories between men and women, an elevated rate of long-term unemployed and subpar integration of migrants. Addressing these issues is crucial for a more inclusive recovery, facing demographic change and the sustainability of social security systems.
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2021 Structural Reform Priorities
The Austrian economy has performed well over the recent decades. Real GDP per capita was the 11th highest in the OECD and 6th highest in the EU in 2018, slightly ahead of Germany, Finland and Belgium. It fell however behind the most rapidly growing OECD countries in the 2010s and the gap has widened more rapidly than in comparable countries. Available indicators of well-being remain nonetheless well above OECD averages, with limited discrepancy between population groups and regions, witnessing a high degree of social cohesion.