Country Report Austria September 2009

Summary

The current "grand coalition" between the Social Democratic Party (SPO) and the Austrian People's Party (OVP) has been and should continue to be characterised by more co-operation than the previous one.
The return of social partners to the government indicates a move back towards the traditional consensual approach that dominated politics in Austria up until 2000.
The Economist Intelligence Unit expects the Freedom Party (FPO) to remain a significant force, as the third-largest party after the two coalition partners, but a reunification with the Alliance for the Future of Austria (BZO) is unlikely.
The government's short-term focus is to help consumers and businesses weather the economic downturn and to continue to take measures to shore up the banking sector.
Given its rapidly rising budget deficit and levels of public debt, we expect the government to unwind its fiscal stimulus measures during 2010 as it seeks to implement austerity measures.
After growing by 1.7% in 2008, GDP will contract by 3.3% in 2009, before returning to moderate growth, of 0.2%, in 2010. Any recovery will probably have to be linked to one in Germany, which is not expected until 2010.

A recent opinion poll revealed that the OVP and SPO each have around 31% support. The OVP has lost some popularity in recent months, partly because of speculation that the federal debt agency invested in high-risk securities.
On August 19th the minister of justice, Claudia Bandion-Ortner, met with Gerhard Dorfler and representatives of the Slovene minority in Carinthia to discuss the issue of multilingual road signs.
In an interview with a daily newspaper, Die Presse, on July 26th, the third president of parliament, Martin Graf (FPO), called for a referendum on the future status of South Tyrol. His proposal met with widespread opposition.
On July 28th the council of ministers passed a draft law to introduce a minimum income for unemployed persons of ???733 per month.
The ministers of justice and the economy presented a new draft insolvency law to parliament, aimed at increasing the number of companies that can continue their operations and be rehabilitated.
According to an environmental umbrella group, Umweltdachverband, the government plans to construct 60 new hydroelectric power plants.
Bank Austria's Purchasing Managers' Index score improved to 49.9 in August.

Source: Country Report

This report covers the following industry codes:
SIC Code: 39
NAICS Code: 31