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According to the Austrian National Bank, the economy is recovering faster than expected
Posted by Otto Knotzer on August 10, 2020 - 7:33am
According to the Oesterreichische Nationalbank (OeNB), Austria's economy is recovering faster than expected. If there is no strong second wave of Covid 19 infections, the domestic economy could therefore collapse less than 6 percent in 2020 than assumed in the OeNB forecast at the beginning of June, the central bank said on Friday.
Analysis of the real-time data for the past two weeks (from July 20 to August 2) indicated a further economic recovery. Last week, the truck mileage was only 1 1/2 percent below the previous year's figure and the mileage relevant for export activities in the border section was 4 1/2 percent. Electricity consumption, a reliable indicator of industrial production, was 5 percent below the previous year in July, after a minus that was twice as large in the months of April to June.
The revival of industrial production is also reflected in the latest data from the purchasing managers' index - the Bank Austria PMI for July returned to growth for the first time in the corona crisis last week at 52.8 points and reached its highest value in a year and a half.
Slight improvement in private consumption
Payment transaction data would signal a further slight improvement in private consumption and in domestic tourism, the OeNB added. Overall, the GDP gap has fallen in the past two weeks to 4.0 and 3.8 percent year-on-year.
After GDP had slumped by a quarter compared to the previous year at the height of the lockdown at the end of March / beginning of April, the GDP gap had narrowed to 7 1/2 percent by the end of the second quarter, according to the OeNB. With a decline to below 5 percent, the GDP gap was lower than expected from the perspective of central bank economists in July. "Instead of 7.2 percent, real GDP in 2020 could 'only' shrink by around 6 percent," it now says. The OeNB GDP indicators for the next few weeks would show whether this is the case.
The risk of this forecast remains "clearly directed downwards" - should there be a stronger second Covid-19 wave, the recession in Austria will be stronger than the OeNB expected in the June forecast. From an economic point of view, the successful containment of the coronavirus and a possible second wave remain an important common challenge for politics and the population.
