Austria

WIFO is forecasting further secure economic growth for the Eurozone, with a GDP increase of 2.4%. According to the forecast, Austria will benefit greatly from strong growth in foreign trade in this environment, which would maintain a high level of capacity utilisation for the production of material goods. Real export volume and investments in equipment are both projected to increase by another 5.0% in the coming year. Even though they will likely no longer reach the levels in 2017 (+5.5% and +8.5%, respectively), they are expected to make a major contribution to medium-term economic growth. As a result of the economic growth and further increases in employment, the unemployment rate would also fall further to 5.4% in 2018. The good economy and associated high level of economic activity would increase tax revenues thereby creating additional leeway in the public budget. The disposable income of private households is also forecast to increase in the next two years (+1.4% and 1.6%, respectively). This, combined with a lower savings rate, implies an increase within the level of private household consumption.

According to WIFO, government debt based on the Maastricht definition will fall to 0.4% of GDP in 2018 and move further towards a zero deficit in 2019. This will also have a highly positive effect on government debt (2017: 80.2% and 2018: 77.5%, respectively).

Even if the forecasts assume a moderate increase in the next two years, an abrupt change in the general interest rate environment cannot be expected in the short term.

The Austrian Insurance Association (VVO) is forecasting an increase in total premiums in 2018. This is once again expected to be comprised of a decrease in life insurance and major increases in the property and casualty and health lines of business. Regular premium life insurance would remain relatively stable, and health insurance is expected to be one of the strongest drivers in 2018.