Country Report Austria January 2009

Outlook for 2009-10

• The Economist Intelligence Unit believes that the new "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.
• The government is expected to encourage research and development (R&D) and innovation to shift from a traditional to a high-tech, knowledge-based economy with companies excelling in highly specialised, niche areas.
• After growing by an estimated 1.3% in 2008, GDP will contract by 2% in 2009, before expanding moderately by 0.4% in 2010.

Monthly review

• According to an opinion poll released on December 23rd 2008, support for the SPO and the OVP has risen since the election on September 28th. This is partly owing to the economic recovery packages passed by the government.
• The FPO has seen the biggest rise in popularity since September, with some voters switching allegiance from the BZO to the FPO following the death of the former BZO chairman, Jorg Haider, in October.
• The outcome of the provincial elections in Carinthia on March 1st 2009 is unclear. Opinion polls show the BZO has 41% and the SPO has 38% support in Carinthia, but the performance of the BZO could be weakened by the FPO.
• The Eurobarometer survey of October-November 2008 suggests that Austrian support levels for the EU have risen since April-May 2008.
• The coalition agreed on a second economic recovery package, which will cost the government an estimated 1.8bn. This package follows a first economic recovery programme agreed in October and a planned tax reform.
• A bilateral dispute between Russia and Ukraine over unpaid debts for gas supplied by the former in 2008 and over gas pricing in 2009 caused Russian supplies of gas to Austria to halt in January.
• Inflation eased from 3.7% in the third quarter of 2008 to 2.3% in the fourth.

Source: Country Report

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

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