Bank Austria Economics & Market Analysis Austria Austrian Economy August http://economicresearch-e.bankaustria.at
Austrian Economy Author: Walter Pudschedl Imprint Published by UniCredit Bank Austria AG Schottengasse -8 Vienna Telephone + ()-97 Fax + ()- E-Mail: econresearch.austria@unicreditgroup.at As of August Bank Austria page
Austrian Economy Overview 9 Revision ) Revision ) Revision ) Revision ) GDP (real, in %) -.9... Inflation (CPI in %)..9.. ) Revision since the last report of July Growth forecast for raised to. per cent momentum expected to slow considerably in the second half of the year Inflation at. per cent in July, the highest level since September 8 annual average for still expected to be. per cent Retail sales decline slightly in the first half of the year unfavourable conditions persist Reports of success from the labour market record employment and the lowest unemployment rate in Europe Despite a preliminary end to the two-year boom, industry remains the main driver of economic growth in Trade deficit higher Made in Austria suffers from global economic downturn Record public revenues thanks to strong economic growth in the first half of the year In Q, economic growth accelerated to per cent compared to the previous quarter (Q: +.8 per cent). In addition to the steady increase in domestic demand, foreign trade made a stronger contribution to growth once again. We are raising our growth forecast for as a whole to. per cent. However, the growth prospects for the Austrian economy are still under heavy pressure due to the high degree of uncertainty around the world. We reduce our estimate for GDP growth for from.8 to. per cent. In July, the inflation rate rose to. per cent in annual comparison. Besides spending on housing, food, package holidays, restaurants and hotels, the main culprit behind this was once again the rising price of mineral oil products. Persistently high commodity prices will keep inflation hanging on stubbornly above the -per-cent mark in the coming months as well. We do not expect inflation to sink until the turn of /, when the strong increases in commodity prices from the previous year will be removed from the equation. In the first half of the year, retail sales declined in year-on-year terms by.7 per cent. The rapidly growing uncertainties in recent weeks have started to take their toll on Austrian consumer sentiment. Although we expect retail sales to edge into positive territory for as a whole, the rate of growth will be considerably lower than the excellent result seen in the previous year. In July, Austria had the lowest unemployment rate in Europe, at per cent (EU method). At the same time, the country hit a new high in employment for the seventh month in a row, with over. million employees. Although the economic slowdown in the second half of the year will have a negative impact on the labour market, we expect the number of employees to reach a new all-time high for the year as a whole. The unemployment rate will come to. per cent (EU definition), which is likely to be the lowest in Europe. Following strong growth in the first quarter, Austrian industry is showing increasing signs of a cooldown. The Bank Austria Purchasing Managers Index highlights this trend. It indicates a decline in new orders for Austrian industrial companies for the second month in a row. The overall indicator hit.8 points, the lowest level since December 9, putting it just slightly above the growth threshold of points. Despite the start of this trend reversal, we expect an average annual increase of 8 per cent for, which means that industry will remain the main driver of economic growth. In the first five months of the year, the total value of exported goods was. per cent higher in annual comparison. However, the trade deficit widened to EUR. billion ( /: EUR.7 billion) during this period due to the strong increase in imports (+. per cent). The seasonally adjusted data show that momentum decreased dramatically after the first quarter. Due to the slower pace of global growth and rising risks, we expect poorer export growth in the second half of the year. In the first half of, total tax revenues rose by.8 per cent in year-on-year terms and hit a new high of EUR.8 billion. Income tax revenues made up the majority of this increase, rising by EUR million compared to the same period of the previous year. Corporate income tax grew much more dramatically, increasing to a total of EUR. billion in the first half of the year (+ per cent compared to the previous year). In light of the strong economic recovery and the rise of inflation to over per cent, we expect a budget deficit of. per cent for well below the official planned value. Bank Austria page August
Austrian Economy Austrian Economic Forecast forecast 7 8 9 Real change in % GDP.7. -.9... Private consumption.7....7.9 Public consumption... -...8 Gross fixed capital formation*).9. -8.8 -... Investments in plant and machinery. 7. -.. 9.. Investments in construction.. -. -... Exports 8.. -.... Imports 7. -.9 -. 9. 8.. CPI (change in %)....9.. HCPI (change in %)....7.. Current account (in EUR bn) 9..8 8. 7.8 9.. Current account (in % of GDP)..9..7.. Employment in s**) 7 8 7 change in %..7 -..8.8.9 Unemployment rate (nat. def.)..9 7..9.. Unemployment rate (EU def.)..8.8... Unemployed (annual average in,) General gov. balance (in % of GDP) -.9 -.9 -. -. -. -. Public-sector debt (in % of GDP).7.8 9. 7. 7. 7. Nominal GDP (in euro bn) 7 8 7 8 *) excluding changes in inventory **) excluding persons drawing maternity benefits, military service and training Bank Austria Bank Austria page August
Austrian Economy - Forecast GDP (real) Inflation (CPI) forecast.7..7.........8 - - - - -.9 - - - 7 8 9 / / / / / / / /7 /8 /9 / / / Wesentliche Rahmenbedingungen estimate forecast forecast 7 8 9 9 (Real change in %) GDP..7. -.9... Eurozone GDP growth -..7..7 Private consumption.8.7....7.9 Public consumption.7... -...8 US GDP growth -...8. Gross fixed capital formation.8.9. -8.8 -... UniCredit MIB Investments in plant and machinery.8. 7. -.. 9.. Investments in construction.7.. -. -... Exports 7.7 8.. -.... Imports. 7. -.9 -. 9. 8.. (yearly average) 9 CPI (change in %).....9.. HCPI (change in % ).7....7.. USD per euro.9... forecast Employment (change in %)*)..9. -...8.9 Crude oil (USD per brl)* 8 9 Unemployment rate (nat. def.).8..9 7..9.. Unemployment rate (EU def.).8..8.8... -y gov. bonds.9... General gov. balance (in % of GDP) -. -.9 -.9 -. -. -. -. -months money..8..7 Public sector debt (in % of GDP).8.7.8 9. 7. 7. 7. UniCredit MIB, Thomson Reuters * Futures *) excluding maternity/paternity leave, military service and training programmes August
Austrian Economy - Data 7 8 9 II III IV I II / / / / / / / / / 7/ Bank Austria Business Indicator.. -..7...7.8.9.8.9.7.7.7.8..8.9. GDP growth (prev. quarter, annualised).7. -.9...9... Industrial confidence Eurozone -8-9 - - - 7 7 7 Germany 8-7 - - - 8 France -9-8 -9 - -7 - - - 8 Italy -8 - - -8 - - - - - - - - Netherlands - - - - - - - - - Spain -8 - - - - -9-9 - - - -7-8 -7 - - - - - Bank Austria Industrial confidence Eurozone - - -7-7 -7 - - - - - - Bank Austria Purchase Manager s Index. 7...8 9. 7...9... 7.7..9. 7....8 Backlog of work 7.....7 9 9 8 New export orders 8..7...9 9 8 8 Output expectations 7 9. 8. 7... 8 7 7 Industrial confidence Austria -7-9 - -.8 -.9.9.. - - - Industrial output change against previous year..9-9...8.8. 9...7. 8. 9. 9.7 9..8. change against previous month (saisonal adjusted). -. -..7....8.. -...... -. Foreign trade Exports (change against previous year in %).. -....9 9..8...7.. 9.9.. Exports (chg. against prev. month, s.a. in %, m mov. av.) -. -.9 -.... 9.. -..8 -.9.. -..7 -. Imports (change against previous year in %) 9..7-8.. 9.. 9.8.9 8.. 8.9.7.8 9... Imports (chg. against prev. month, s.a. in %, m mov. av.). -. -8....7.... -.9.8. -.. -. Ex-Im (m cum., euro bn). -. -.8 -. -.8 -.9 -. -.8 -. -. -. -.7 -.8 -.8 -. -. Construction Confidence indicator - - - - - - - - -9 - - - - - -7 - -9 - - August
Austrian Economy - Data 7 8 9 II III IV I II / / / / / / / / / 7/ Retail trade Confidence indicator. -. -..8.7 8. 9. 9.8 7..8 9.9. 9. 9.8. 7.8. 7.7. Retail trade nom. (change against previous year in %).9....7. 8. -.8........7. Retail trade nom. (change against previous year in %, mav.).7. 8. -.8.8.......8.8 Retail trade real (change against previous year in %).....9..7 -. -...7 -. -. -... -. Retail trade real (chg. against prev. month in %, s.a., mav.).9..7 -. -... -. -. -.... Automobile trade nom. (change against prev. year in %).. -..7 -.. 8..9... 9. 9..7 7. Tourism Overnight stay (change against previous year in %)....7 -.8..7..9 7.9 -..9 -.7. -. -.8 Labour market Employment*) (change against previous year in %) 89 9 8 77 8 87 97 7 9 8 Employment (s.a., change against previous month in %) 77 8 8 9 7 8 Unemployed (change against previous year in ) -.9 -. 8. -9. -.7 -. -. -. -8. -9. -. -. -. -. -.7 -. -.7 -.8 -.9 Unemployment rate (in %, s.a.)..8.7............... Prices CPI (change against previous year in %)....9..8..9...9........ HCPI (Change against previous year in %)....8.8....7.9.8.....7.7.7.8 Prices of raw materials (change against prev. year in %).. -...8 8... 8. 8. 7.... 9..8 9. 8. 8. Crude oil (change against previous year in %).7. -. 8...9. 9.7.8. 9.... 7. 8.... Financial market M Euribor....8.7.9............. -year government bonds...9...9....8......7... USD per euro................... Total loans (change against previous year in %, eop). 7. -.7 -......8..7.......8 Consumption loans (change against prev. year in %, eop).........8..8.......8 *) excluding maternity/paternity leave, military service and training programmes August
Austrian Economy - Graphs GDP and industrial production GDP (yoy in %, real; left scale) Industrial production (yoy in %; m avg.; right scale) Industrial and consumer confidence Industrial confidence Consumer confidence - - - 7 8 9 - - - - - - - - 7 8 9 - - - - Austria's exports and imports Bank Austria Business Indicator Imports (yoy in %; m avg.) Exports (yoy in %; m avg.) GDP (yoy in %, real) Bank Austria Business Indicator - - - - - - - - - 7 8 9 - Economics - and Market Analysis 7 8 9 - August
Austrian Economy - Graphs Unemployed Unemployed (yoy in,; right scale) Unemployment rate (in %; seasonally adjusted; left scale) Employment Employed (excl. matern./patern. leave) - left scale yoy in % excl. matern./patern. leave, military serv. and train. progr. - right scale 8 - - 9-7 8 9-8 7 8 9 - Inflation rate Retail trade HCPI (yoy in %) CPI (yoy in %) - 7 8 9 - Retail trade (yoy in %; real; m avg.; left scale) Confidence indicator (right scale) 8 - - - -8 7 8 9 8 - - -8 - August
Money market Euro area (in %) -M money (in %) -M-Euribor Repo Marginal lending facility Deposit facility 7 8 9 Euribor USD Libor 8 7 7 8 9 8 7 -M money (in %) UK Schweiz Japan UK Japan Japan Switzerland Schweiz 8 7 7 78 89 9 8 7 Financial forecasts /8/ in m in 9m Euro-m money market... Forwards..7 Euro-y German bonds...7 Euro-y Austrian bonds.7..8 US$-m money market.7.. Forward.7. US-y treasuries.9.. CHF/Euro... Forwards.. US$/Euro...9 Forwards.. Source: Datastream, Bloomberg, Bank Austria; Forecast: UniCredit Research August
Long-term interest rates -Y Government bonds (yield in %) -Y Government bonds (yield in %). US Treasury Germany... UK Switzerland Japan............... 7 8 9.. 7 8 9. -Y Goverment bonds (yield in %) Interest rate differential Austria - Germany Austria..... 7 8 9.....8.... -. -. 7 8 9 August
Equity market USA - Euro area Germany - Euro area Dow-Jones (left scale) Euro-Stoxx (right scale) 8 7 8 9 DAX (left scale) Euro-Stoxx (right scale) 9 8 7 7 8 9 UK - Japan Austria - Euro area FTSE (left scale) NIKKEI (right scale) 7 7 8 9 ATX (left scale) Euro Stoxx (right scale) 7 8 9 8 August
Exchange rates USD per Euro SFR per Euro........9.8 7 8 9........9.8.7..... 7 8 9.7..... Yen per Euro GBP per Euro 7 9 8 7 8 9 7 9 8..9.9.8.8.7.7... 7 8 9..9.9.8.8.7.7... August
Austrian Economy - Selected indicators Forecast 7 8 9 Change against prev. year in % GDP (real)....7. -.9... Industrial output (real) 7.. 7.7..9 -..9 8.. Gross fixed capital formation (real).7..8.9. -8.8 -... CPI (yearly average).......9.. Unemployment rate (yearly average).9..8..8.8... General gov. balance (in % of GDP) -. -.7 -. -.9 -.9 -. -. -. -. GDP (nom., Euro bn).8. 7. 7. 8. 7. 8... Per capita GDP (in euro) 8,9 9,,78,79,97,8,9,,7 in EUR mn Merchandise exports 89,88 9,7,7,8 7, 9,79 9,9,,9 Merchandise imports 9,9 9,99,, 9,8 97,7,,8, Current account balance,,9 7,8 9,,77 8,9 7,79 9,, Current account balance (in % of GDP)...8..9..7.. Foreign direct investment (inflow, net), 8,7,,7,8,7,99,, Gross foreign debt (end of period),, 88,8,9 98,7 7,7 8, 9,, Gross foreign debt (in % of GDP) 87..7 9... 9.. 98.7 9. Import cover (in months) *) n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. EUR (yearly average)......... EUR/USD (yearly average)....7.7.9... *) not useful for Austria as a member of the eurozone Source: Bank Austria, OeNB, Wifo, UniCredit Research August
Austrian Economy Austrian Economy We invite you to visit the economic analyses on Bank Austria s website: www.bankaustria.at under "Analyses & Research" in the section "Economic Research" or directly at http://economicresearch-e.bankaustria.at If you would like to receive information on our most recent publications by e-mail, please subscribe to the newsletter Bank Austria EconomicNews on the website. If you have further questions, please send us an e-mail to econresearch.austria@unicreditgroup.at Disclaimer of liability The opinions of the authors do not necessarily reflect those of Bank Austria and those of the companies which have engaged the services of the authors. The information contained in this publication is not to be interpreted as an offer or invitation for the sale or purchase of securities of any kind. We reserve the right to modify the views expressed in this publication at any time without prior notification. Bank Austria