Austrian growth slowed to 0.1% in the third quarter and the outlook for the rest of the year is worsening as the exports which fuelled its expansion began to dry up, research institute WIFO said on Friday.
Exports fell 0.3% in the Q3 and are expected to decline further in their first contraction since the 1993 global recession as main trade partner Germany is in recession, WIFO economist Sandra Steindl said. Germany’s economy shrank by 0.5% in the Q3 and its final three months are not expected to be much better.
Europe’s biggest economy devours 30% of Austrian exports. “Against the backdrop of the international downturn, the export-driven production of tangible goods shows a significant decline,” WIFO said in its flash estimate of Austria’s Q3 gross domestic product (GDP). “The downturn of Austria’s industry will probably accelerate in the final quarter,” it said. “For the first time in five years, more companies reported a decline of production than an expansion in October.”
Austria rode an export-driven mini-boom in 2006 and 2007, when it grew significantly faster than the euro zone average, helped by a buoyant German economy and by rising trade with the neighboring countries in emerging Europe. But it could now have its worst two consecutive years of growth in more than half a century, the country’s biggest bank said on Thursday as its economic sentiment index plummeted to the lowest in its 10-year history.
WIFO revised down its Q2 growth estimate to 0.3% from 0.4% previously. The annual GDP growth rate was 1.5% in the Q3, compared with 2.2% in the second. Austria accounts for 3% of total euro zone GDP. (Reuters)