IMF Staff Country Reports

The Austrian economy faces a challenging environment following two
successive years of recession. Adverse shocks from high energy prices and the rapid rise
in interest rates to curtail subsequent inflation have dragged down domestic and
external demand, as have heightened uncertainty and weak sentiment. The downturn in
activity has been especially significant in manufacturing, construction, and some services.
Despite weak demand, core inflation has been persistent due in part to rapid wage
growth. And while strong policy responses helped to cushion the impact of recent
shocks, the fiscal deficit and public debt have risen significantly from pre-pandemic
levels. Over the medium term, weak productivity and demographic aging pose
significant growth and fiscal headwinds. At the same time, Austria retains strong
institutions that equip it to deal with these challenges.