Economic environment

From a macroeconomic point of view, 2016 was characterised by moderate growth worldwide and continuation of the low interest rate environment. In spite of a low price of oil averaging USD 45 per barrel, real economic growth fell to +1.5% in the USA (2015: +2.6%), +1.6% in the Eurozone (2015: +2.0%) and +6.7% in China (2015: +6.9%). The International Monetary Fund (IMF) forecast in October 2016 that the global economy would grow by 3.1% in 2016 (2015: +3.2%).

In terms of the major emerging markets, China, India and South Africa showed similar development, with growth rates generally slightly below those in the previous year. On the other hand, growth was higher than the previous year in Brazil and Russia, although both countries are still in recession. Growth in the EU slowed year-on-year by 0.4 percentage points to +1.9% in 2016.

Standard & Poor’s continues to award Austria a credit rating of AA+ with a stable outlook. According to the Austrian Institute of Economic Research (WIFO), Austria’s gross domestic product (GDP) grew 1.5%, representing an increase of 0.5 percentage points over the previous year. This moderate increase, however, is likely to already represent the highpoint for economic growth in the medium term. The insurance industry recorded a 2.1% decrease in premiums in the year under review, or an increase of +1.0% when single-premium life products are excluded. Motor vehicle demand was the main driver for the Austrian insurance market in the year just ended. Vehicle investments in the country as a whole rose by close to 20% year-on-year.

When adjusted for purchasing power, average per capita GDP grew 3.4% in Central and Eastern Europe (CEE) in 2016, representing a significant year-on-year increase of 0.7 percentage points. According to the Vienna Institute for International Economic Studies (WIIW), Slovakia, Poland and Romania were the major engines of growth in the larger markets, with growth rates of between +3.2% and +4.7%. Bulgaria and Turkey also grew by more than 3%. Growth in the Czech Republic, on the other hand, was 2.3 percentage points below the level of the previous year at +2.2% in 2016.

Croatia continued to recover with a growth rate of +2.5%, as did Serbia where growth increased by 1.4 percentage points. Due to the end of EU structural support programmes, the growth rate fell in Hungary from +3.1% in 2015 to +2.0% in 2016. However, this trend is expected to reverse again in 2017. The economic growth rate increased in almost all of the remaining smaller markets in 2016 compared to 2015. Ukraine found its way out of depression in 2016, recording economic growth of 0.8%. Gross domestic product fell 2.8% in Belarus in 2016.

The global economy as a whole was influenced by the US Federal Reserve’s turnaround in interest rate policy, even though it is proceeding very slowly, the lowest level of oil prices in several decades, and a number of elections whose precise effects will not be known until future years. The UK population voted for Brexit, and the 45th president was elected in the USA. Significant national elections also took place in 14 of VIG’s 26 countries.