Country Report Austria April 2009

Summary

The Economist Intelligence Unit believes that the current "grand coalition" between the Social Democratic Party (SPO) and the Austrian People's Party (OVP) will 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.
Support for the Alliance for the Future of Austria (BZO) will continue to fall throughout the forecast period. However, it is unlikely that the Freedom Party (FPO) and BZO will join forces, with their leaders rejecting a reunification.
The government will implement two packages aimed at boosting consumer purchasing power and will focus on taking measures to shore up liquidity in the banking sector.
We expect the government to promote an initiative to create a rescue package for central and eastern Europe in co-operation with those countries most exposed to the region and several international institutions.
After growing by 1.6% in 2008, GDP will contract by 3.3% in 2009, before contracting a little further, by 0.9%, in 2010.

The minister of education, Claudia Schmied, presented a reform of Austria's educational system, which drew opposition from teachers for its proposal to increase the number of hours that teachers spend in the classroom.
According to a trust index by polling agency, OGM, Austrians' confidence in their government 100 days after it first took office remains high.
The BZO announced that it will form a coalition government with the OVP in Carinthia. The BZO rejected a proposal by the FPO that the two parties form a partnership in the Carinthian and Salzburg provincial governments.
On March 13th Austria announced that it would modify its existing bank secrecy laws in order to avoid being categorised as a tax haven by the OECD.
Bank Austria, BAWAG and Volksbank AG have all approached the Ministry of Finance to ask for state aid. Erste Bank, on the other hand, announced that it will raise capital by selling shares of new stock to employees.
The spreads between five-year sovereign credit default swaps and ten-year government bonds in Austria and the corresponding German bunds have continued to rise through the first quarter of 2009.
Employment contracted by 0.7% in February 2009 compared with the year-earlier period, reflecting the first decline in employment since April 2002.

Source: Country Report

This report covers the following industry codes:
SIC Code: 39;70
NAICS Code: 31;72