Austrian Economic Growth May Slow Down in 2020, Nowotny Says
Austria’s central bank may have to cut its outlook for economic growth next year another time, reflecting a large number of downside risks led by exposure to Germany and its car industry, according to outgoing Governor Ewald Nowotny.
The central bank kept its GDP projection for 2019 at 1.5%, the level to which it had lowered it in June, Nowotny told reporters in Alpbach, Austria. That’s above Germany’s meager 0.6% and the EU average, but there’s too much uncertainty to update the 2020 forecast yet, he said.
“In fairness, there’s a long list of negative risks, and this forecast is perhaps on the optimistic side,” said Nowotny, whose term ends Saturday and who’ll be followed by Robert Holzmann. “I assume we’ll have to cut the forecast for 2020” from the current level of 1.6%, he added.
Austria’s economy is deeply tied to that of its northern neighbor, which consumes about a third of its exports -- a big part of which consists of supplies for the German car industry. It’s less exposed to China and the U.S. than Germany, and a growing chunk of shipments go to the growing economies of eastern Europe.
Nowotny said while consumption continues to be a stabilizing pillar for economic growth for now, that might change in the future. “We’re seeing first signs in the labor market that we’re at the beginning of a downturn.”
He said that it would be good for Austria’s parliament to bring forward elements of a tax reform that had been proposed by the government ousted in May, especially measures that benefit low earners. The country is headed for snap elections next month and is currently governed by an interim administration of technocrats.
©2019 Bloomberg L.P.