Recovery not in sight as think tank corrects growth forecast

A significant upward trend is not in sight for Austria’s economy, a top think tank has warned.The Vienna-based Institute for Economic Research (Wifo) today (Fri) lowered its economic growth forecast for 2010 and 2011. Wifo officials said they expected the country’s economy to grow by 1.3 per cent this year and by 1.4 per cent in 2011 – after predicting growth rates of 1.5 and 1.6 per cent last December.The Institute for Higher Studies (IHS) meanwhile announced it would not change its predictions. The body said last year it expected a 1.3 per cent growth this year and 1.7 per cent growth in 2011.The Austrian economy shrank by 3.6 per cent last year compared to 2008.Wifo explained “lacking impulses” from the Austrian exports remained a problem. The institute claimed key trading countries were still combating the effects of the economic crisis which has held the world in its grip since autumn 2008. Germany has been Austria’s most important partner country for exports and imports for decades.Wifo also warned the situation on the Austrian labour market would not improve this and next year. The think tank said it expected the unemployment rate to soar from five to 5.2 per cent this year, while a 5.4 per cent jobless rate was expected for next year.The Austrian government has come under fire by opposition parties recently for “failing on the job front” as almost 400,000 people living in the country are currently unemployed.Wifo meanwhile announced the consumer price index is expected to soar higher than expected. The institute also said inflation would reach a level of 1.4 per cent this year before levelling at 1.8 per cent in 2011. The body had forecast a 2010 inflation rate of 1.3 per cent and 1.3 per cent for next year last December.Inflation in Austria dropped slightly last month from 1.2 per cent in January to 0.9 per cent. Federal statistics agency Statistik Austria experts said last week dropping foodstuff and clothes prices caused the decline, while rising fuel prices barred inflation from reaching just 0.6 per cent.