Bank Austria Economics & Market Analysis Austria Austrian Economy May 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 May Bank Austria page
Austrian Economy Overview 9 Revision ) Revision ) Revision ) Revision ) GDP (real, in %) -.9...8 Inflation (CPI in %)..9.. ) Revision since the last report of March Strong first quarter growth forecast for revised upwards to. per cent Inflation climbs to. per cent in April expected to peak at ½ per cent in the summer Retail sales stagnate in the first quarter outlook less favourable than in the previous year Labour market improvement accelerates momentum will ease as the year progresses Exceptionally dynamic growth of exports and industry in the early part of the year from now on, slowdown in export activity and more moderate industrial output Strong tax revenues robust economic growth and inflationary trend enable the government to exceed the targets for its financial plan for - In the first quarter of, economic growth again accelerated slightly over the already dynamic performance seen at the end of. The strong impetus from foreign demand was supported by the domestic economy, especially investments, which resulted in GDP growth of. per cent over the previous quarter. In a year-on-year comparison, economic growth again exceeded per cent for the first time since the middle of 7. The growth rate has now passed its peak level and will slow in the subsequent quarters. Following the good start to the year we now expect GDP growth of. per cent for. Inflation continued its upward trend in April. At. per cent y-o-y, it has climbed to its highest level in two and a half years. While inflation continues to be driven mainly by commodity prices (crude oil, agricultural commodities), it is in Austria also fuelled by the impacts of the fiscal measures (currently the tax on air fares) as well as a noticeable rise in prices for services, such as rent. In light of the current supply-demand trend, there is no sign of inflationary pressure from economic expansion. Driven by commodity prices and initial second-round effects, the inflation rate will in the coming months exceed per cent, which is well above the ECB s target figure (max. per cent). We expect an average inflation rate of. per cent for. The first three months have not seen an increase in retail sales in real terms. The general environment (slowdown in the improvement in employment, higher inflation, slight easing of global economic growth, budget consolidation) is less favourable than in the previous year. Retail sales in will fall short of the very good result of the previous year (+. per cent). The situation on the labour market continued to improve in the first four months. Employment has risen by an average.8 per cent and unemployment has declined by per cent. While this improvement will continue in the next few months, it will probably lose some of its momentum. The favourable labour market trend will, towards the end of, offset the sharp crisis-induced decline in employment, but this will not yet be the case with unemployment. In the first quarter, economic growth was in large part driven by the stronger momentum of exports, with industry benefiting substantially from this trend. The volume of new orders and orders on hand at the beginning of the second quarter suggests that foreign demand is losing momentum, prompting Austria s industry to enter calmer waters. We still expect industrial output to grow by about per cent in, only a little below the strong.7 per cent growth seen in the previous year. Strong foreign demand we expect nominal merchandise exports to expand by over per cent will continue to drive industrial expansion. The continued strong economic upturn, and inflation which has meanwhile risen to over per cent, should in the current year enable the government to reduce the budget deficit to.9% of GDP as planned. Indeed, they may even give the government a better starting position for the financial plan for the period - that was adopted in the middle of May. It is therefore not to be ruled out that new debt may fall to below per cent, possibly in the coming year. This would then pave the way for slower growth of total public debt, which according to the financial plan is anticipated to rise to up to 7. per cent of GDP (). Bank Austria page May
Austrian Economy Austrian Economic Forecast forecast 7 8 9 Real change in % GDP.7. -.9...8 Private consumption.7..... Public consumption... -...9 Gross fixed capital formation*).9. -8.8 -... Investments in plant and machinery. 7. -..8 7.. Investments in construction.. -. -..8. Exports 8.. -..8 9.. Imports 7. -.9 -. 9. 7.7. 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 %.9. -...8.8 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. 7.9 7. Nominal GDP (in euro bn) 7 8 7 8 99 *) excluding changes in inventory **) excluding persons drawing maternity benefits, military service and training Bank Austria Bank Austria page May
Austrian Economy - Forecast GDP (real) Inflation (CPI)..7 forecast....8 - - - - - -.9 - - 7 8 9 / / / / / / / /7 /8 /9 / / / Wesentliche Rahmenbedingungen estimate forecast forecast 7 8 9 9 (Real change in %) GDP..7. -.9...8 Eurozone GDP growth -..7..7 Private consumption.8.7..... Public consumption.7... -...9 US GDP growth -..9..7 Gross fixed capital formation.8.9. -8.8 -... UniCredit MIB Investments in plant and machinery.8. 7. -..8 7.. Investments in construction.7.. -. -..8. Exports 7.7 8.. -..8 9.. Imports. 7. -.9 -. 9. 7.7. (yearly average) 8 9 CPI (change in %).....9.. HCPI (change in % ).7....7.. USD per euro.7.9..8 forecast Employment (change in %)*)..9. -...8.8 Crude oil (USD per brl)* 97 8 Unemployment rate (nat. def.).8..9 7..9.. Unemployment rate (EU def.).8..8.8... -y gov. bonds..9..8 General gov. balance (in % of GDP) -. -.9 -.9 -. -. -. -. -months money...8. Public sector debt (in % of GDP).8.7.8 9. 7. 7.9 7. UniCredit MIB, Thomson Reuters * Futures *) excluding maternity/paternity leave, military service and training programmes May
Austrian Economy - Data 7 8 9 I II III IV I 7/ 8/ 9/ / / / / / / / Bank Austria Business Indicator.. -......7.8.8....7.7.7.7.8. GDP growth (prev. quarter, annualised).7. -.9..8.... Industrial confidence Eurozone -8-9 - - - - - - - 7 7 Germany 8-7 - - - - 7 8 France -9-8 -9 - - -7 - - -7 - - - 8 Italy -8 - - - -8 - - - - - - - Netherlands - - - -8 - - - - - - - - Spain -8 - - -8 - - -9-9 - - - - - -7-8 -7 - - Bank Austria Industrial confidence Eurozone - - -7 - -7-7 - - -8 - - - - - Bank Austria Purchase Manager s Index. 7...8. 9. 7...9 8.9.9... 7.7..9. 7. Backlog of work 7..... 9 9 New export orders 8 7...7.. 8 7 9 Output expectations 7 9 7.9. 8. 7.. 7 7 8 7 7 Industrial confidence Austria -7-9 - -. -.8 -.9.9. - - - - Industrial output change against previous year..9-9.. -..8.8. 8.7.9 7....7. 8. 8.9 change against previous month (saisonal adjusted). -. -..7....... -... -... Foreign trade Exports (change against previous year in %).. -...7..9 8.. 8. 8.8 8.9.8.... Exports (chg. against prev. month, s.a. in %, m mov. av.) -. -.9 -..... 8..8.8. -.8 -..9 -... Imports (change against previous year in %) 9..7-8...7 9.. 8.8.8.8 7. 9.9 7.9..9 9.. Imports (chg. against prev. month, s.a. in %, m mov. av.). -. -8....8.8..7 -...9.. -.7 7. -. Ex-Im (m cum., euro bn). -. -.8 -. -.9 -.8 -.9 -.. -.7 -.7 -.9 -. -. -. -. -. Construction Confidence indicator - - - - -9 - - - - -8 - - - - - - - -7 - May
Austrian Economy - Data 7 8 9 I II III IV I 7/ 8/ 9/ / / / / / / / Retail trade Confidence indicator. -. -..8 -.9.7 8. 9. 9.8.9 8.8 9..8 9.9. 9. 9.8. 7.8 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..7..8..... Retail trade real (change against previous year in %)......9..7 -.9... -...7 -. -. -. Retail trade real (chg. against prev. month in %, s.a., mav.)..9..7 -.9... -... -. -. -.8 Automobile trade nom. (change against prev. year in %).. -..7. -.. 8. 9. -...8... 9. 9.. Tourism Overnight stay (change against previous year in %)....7. -.8..7 -..9..8.9 7.9 -..9-7..8 Labour market Employment*) (change against previous year in %) 89 9 8 7 8 8 9 7 7 8 8 9 98 Employment (s.a., change against previous month in %) 7 7 78 8 8 9 9 97 Unemployed (change against previous year in ) -.9 -. 8. -9. 9. -.7 -. -. -. -.7 -. -. -9. -. -. -. -. -.7 -. Unemployment rate (in %, s.a.)..8.7................ Prices CPI (change against previous year in %)....9...8..9.9.7.9..9..... HCPI (Change against previous year in %)....8..8....7..8.9.8.....7 Prices of raw materials (change against prev. year in %).. -.. 8..8 8....7.7 9.8 8. 7.... 9..8 Crude oil (change against previous year in %).7. -. 8. 7...9. 9.7.... 9.... 7. 8. Financial market M Euribor....8..9.87..9.8.9.88.....9.8. -year government bonds...9...7.8....7.78.8.99.7..7.9.9 USD per euro.....8.7.9..7.8.9..9....7.. Total loans (change against previous year in %, eop). 7. -.7 -..7....9.....7....9. Consumption loans (change against prev. year in %, eop)..............8..... *) excluding maternity/paternity leave, military service and training programmes May
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 - May
Austrian Economy - Graphs Unemployed Employment Unemployed (yoy in,; right scale) Unemployment rate (in %; seasonally adjusted; left scale) 8-9 Employed (excl. matern./patern. leave) - left scale yoy in % excl. matern./patern. leave, military serv. and train. progr. - right scale - - 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 - May
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 7 8 8 9 9 8 7 Financial forecasts // in m in 9m Euro-m money market... Forwards..9 Euro-y German bonds.98.. Euro-y Austrian bonds.9.78.98 US$-m money market.8.. Forward.9. US-y treasuries... CHF/Euro..9. Forwards.. US$/Euro... Forwards..9 Source: Datastream, Bloomberg, Bank Austria; Forecast: UniCredit Research May
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 May
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 May
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... May
Austrian Economy - Selected indicators Forecast 7 8 9 Change against prev. year in % GDP (real)....7. -.9...8 Industrial output (real) 7.. 7.7..9 -..7.. 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. 99.. Per capita GDP (in euro) 8,9 9,,78,79,97,8,8,8,77 in EUR mn Merchandise exports 89,88 9,7,7,8 7, 9,79 9,9,9,88 Merchandise imports 9,9 9,99,, 9,8 97,7,,7,9 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.. 99. 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..8. *) not useful for Austria as a member of the eurozone Source: Bank Austria, OeNB, Wifo, UniCredit Research May
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