A slowdown in net exports and investment is expected to result in GDP growth decelerating from almost 3.5% in 2007 to about 2.5% in 2008 and 2009. Headline inflation is projected to temporarily move above 2% in the short term on account of rising oil and food prices.
The government should stick to its important fiscal consolidation plan and resist pressures to spend cyclical windfalls. The contribution of the inflows of workers from the new EU member states, which cater to labour market needs and help keep wage increases in line with productivity growth, could be made more effective by terminating contract restrictions for these workers.
No. 264/265, December 2007-January 2008
• OECD Economic Outlook No. 82, December 2007
• Visit www.oecd.org/austria
• All OECD Observer articles on Austria