On 11 November 2022, Paolo Gentiloni, the European Commissioner for Economy, presented the Autumn Forecast for the economic development in the EU. Following a strong first half of the year 2022, the energy crisis weakens the purchasing power of households and burdens the manufacturing industry. In spite of the Commission’s positive Summer 2022 Interim Economic Forecast, the forecast for 2023 suggests less growth and higher inflation. Furthermore, due to its continuing reliance on gas imports from Russia, the EU has one of the most vulnerable economies.
Each year in spring and autumn, the EU Commission publishes two comprehensive forecasts concerning the economic development of the EU and individual Member States. In addition, it publishes two interim forecasts in winter and summer.
Shrinking growth at the turn of the year
Following the relaxation of the Covid-19 containment measures, consumer spending, in particular for services, has increased. Hence, real GDP growth in 2022 as a whole increased to 3.3 % in the EU and is thereby well above the 2.7% projection of the Summer interim Forecast. However, according to the EU Commission, this trend will not continue in 2023. Rather, it is expected that growth in the EU will probably only reach 0.3 %. It will only gradually pick up in 2024, reaching ca. 1.6 % in the EU.
This year, Austria’s economic growth is still benefiting from the positive development in the first half of the year. It is therefore still possible that an overall growth of 4.6 % will be reached. However, the drastic rise of energy prices and much higher raw material costs slow down the expansion. For the coming year, economic experts expect lower economic growth of only 0.3 %.
Inflation has not peaked yet
Compared to the Summer Forecast of the EU Commission, inflation continues to rise, reaching 9.3 % for the EU at the end of 2022. The Commission expects inflation to decline in 2023, but to remain high at 7.0 %. For 2023, the EU expects for Austria a decline to 6.7 %.
Labour market remains resilient
In spite of aggravating circumstances, at 213.4 million, the number of people in work in the EU is as high as never before and at 6.0 %, unemployment rates have not been this low for decades. Due to strong economic growth, it was possible to create two million additional jobs in the first half of 2022.
According to the national calculation method, the unemployment rate in Austria was 6 % in October 2022 - according to the Eurostat calculation method it stood at 5.1 %. However, it has to be pointed out that the calculation at EU level differs from the calculation method common in Austria, which is based on AMS registration data.
A degree of uncertainty remains
Due to the fact that Russia’s war of aggression against Ukraine continues, the economic outlook is still fraught with an exceptional degree of uncertainty. A continuing adverse gas market development, prolonged inflation and negative reactions of the global financial markets concerning the new high interest rate environment remain large risk factors in the coming months.