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Lower oil prices, devalued euro provide impetus for Austrian economy: central bank

Xinhua, January 21, 2015 Adjust font size:

The National Bank of Austria (OeNB) Tuesday announced it expects a slight acceleration in economic growth to 0.3 percent for the first quarter of 2015 due to low oil prices and a weakened euro exchange rate.

In its latest economic indicator, the central bank also raised its GDP growth calculation for the entirety of 2014 to 0.5 percent, up from its 0.4 percent estimation in December.

Following economic growth of 0.1 percent in the first two quarters, the third quarter saw a slight dip to minus 0.1 percent before returning to a positive 0.1 percent for the final quarter.

"A slip into a technical recession with falling economic output over two consecutive quarters does not appear apparent, but can not be entirely ruled out," the OeNB wrote.

The depreciation of the euro contributed to a significant increase in exports for the first 10 months of 2014 particularly to the U.S. (7.9 percent increase) and the United Kingdom (6.7 percent increase). The OeNB said it expects this momentum to persist over the coming months.

Demand in Europe however is weak, the bank said, with exports to France (-6.1 percent), Italy (-0.7 percent), and Germany (-0.1 percent) all down, and those to Russia plummeting an even greater -7.7 percent due to sanctions over the Ukraine conflict.

Despite weaknesses in the economy including in the employment sector the bank said it remains "remarkably tough," with companies employing more people in the final quarter of 2014 despite a simultaneous increase in unemployment.

Additionally, despite private consumption developing "very modestly" in 2014, people have profited from massive price drops in the cost of diesel, gasoline, and heating oil, it stated. Endit