The spring forecast of the Commission, which was published on May 4th continues to see dark clouds above the European economy. Now the Commission predicts a decline in GDP in the EU by 4 % for 2009, although only three months before it had worked on the assumption of a decline of 1.8 %. The fast advance of the financial and economic crisis pushes national deficits and unemployment rates in almost all EU states. In accordance with EU calculations, the unemployment rate in Austria - compared to 2008 - will have almost doubled by 2010.
According to the estimate of the Commission, the recession will continue to the end of this year. A recovery of economic growth in Europe is only expected for 2010. The spring forecast clearly shows that the situation on the labour markets will dramatically sharpen throughout the next two years. Due to the collapse of the global economy and because of the decline of world trade and industrial output, the Commission expects a loss of 8.5 billion jobs by 2010 in Europe alone. Both within the EU and the Euro zone, employment this year will decrease by 2.5 %, with a further fall of 1.5 % predicted for 2010. The average unemployment rate in the EU would therefore stand at 11 % in 2010. The recession also has a significant impact on the national deficits of the Member States. It is expected that the public deficit in the EU will rise from 2.3 % in 2008 to an average of 7.3 % in 2010.

Even if Austria, compared to other EU Member States, has been less affected by the financial and economic crisis, the impact is massive. According to calculations by the Commission, the unemployment rate in Austria will rise from 3.8 % in 2008 to 7.1 % in 2010. At 20.5 %, Estonia will probably have the highest unemployment rate in 2010. Austria is in particular suffering from the collapse of foreign trade. It is expected that the export of goods in 2009 will shrink by 12 %. On the other hand, Austria anticipates a slight increase of private consumption by 0.1 % in 2009. The Commission attributes this development to an increase of wages and salaries, to the decline of inflation to 0.5 % (2009) and to the reduction of income tax. Higher social expenditure as well as a reduced tax base triggered by the recession resulted in an increase of Austria’s budget deficit. According to the Commission, the Austrian budget deficit will rise from 0.4 % (2008) to 5.3 % (2010).

Further information:

Press Release

Economic Forecast Spring 2009