Austrian central bank lowers GDP growth forecast

The National Bank of Austria (OeNB) has made a slight downward revision to its GDP growth forecasts for the domestic economy of 0.3 percent for both the current year and next, it revealed in its latest prognosis on Monday.

The amended 2016 growth domestic product (GDP) growth expectation is thus now 1.6 percent, and that of next year 1.5 percent, compared to the most recent prognosis in December.

OeNB governor Ewald Nowotny said the figures show the economy has gained traction. However, the expectations are still well above that of the past four years when economic growth did not manage to exceed the one-percent mark.

"Austria is once again on the same economic growth level as the euro area and Germany," he said.

Tax reforms implemented this year and a subsequent increase in private consumption are to be one of the driving forces of GDP growth, boosting it by 0.4 percent, the OeNB expects.

The central bank had also previously expected the expenditure on both asylum seekers and housing construction initiatives to provide a significant boost, though these will now be less than expected. The former will now only provide a 0.2-percent boost, particularly due to an imposed upper limit on the number of asylum applications that will be accepted each year.

The residential construction initiatives meanwhile will only provide a notable boost from 2017.

Nowotny also noted that within the European Union, newer member states will be providing the greatest growth momentum, to sit at about three percent per year over the coming years, something that will also prove to be a plus for the Austrian economy.

Persistently rising domestic unemployment will, however, only see a slight decline in 2018. Endit