{
  "title": "Austria: Staff Concluding Statement of the 2016 Article IV Mission",
  "publication": "IMF News, December 13, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission",
  "canonical": "https://www.imf.org/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission",
  "overlayPath": "/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/index.md",
  "summary": "Austria is characterized as \"stable and prosperous\" but can improve economic performance to raise incomes and employment within a stable macroeconomic environment.",
  "publishDate": "2016-12-13",
  "sections": [
    {
      "heading": "Overview and recent performance",
      "content": "- Austria is characterized as \"stable and prosperous\" but can improve economic performance to raise incomes and employment within a stable macroeconomic environment.\n- 2016 growth projected at 1.4 percent, an improvement over the average growth of 0.6 percent in 2012-15.\n- Growth drivers in 2016: private consumption (supported by income tax reductions), recovery in investment, and higher public consumption due to spending on refugees.\n- Inflation: 1.4 percent y/y in October 2016; above the Euro Area average (0.5 percent).\n- Employment growth picked up in 2016, absorbing rising labor supply from migration and higher labor force participation; unemployment stabilized but remains elevated relative to historical levels."
    },
    {
      "heading": "Near-term outlook and medium-term projection",
      "content": "- 2017 projection: growth to slow marginally to 1.3 percent as 2016 fiscal stimulus tapers off.\n- Medium-term without reforms: growth reverts to potential rate estimated at just above 1 percent.\n- With the output gap turning positive, inflation is expected to run somewhat above 2 percent in the medium term.\n- Reform scenario: a comprehensive reform package could permanently boost potential GDP by some 3 percent over the medium term."
    },
    {
      "heading": "External sector",
      "content": "- Current account surplus expected to rise to close to 2½ percent of GDP in 2016.\n- Medium-term projection: current account surplus to gradually decline to about 2 percent of GDP, broadly in line with the average over 2012–15.\n- 70 percent of Austria’s exports go to the European Single Market.\n- International investment position has strengthened further."
    },
    {
      "heading": "Financial sector assessment",
      "content": "- Banking system as a whole is well capitalized, but large banks’ capital buffers remain low compared to peers (gap reduced recently).\n- Bank profits increased in 2015/16, largely due to lower risk provisioning and higher profits in a few Central and Eastern European markets; operational costs are being cut only slowly.\n- Credit dynamics:\n  - Business credit demand remains subdued.\n  - Household borrowing (largely mortgages) has picked up amid rising house prices.\n  - Median loan-to-value ratio for mortgage loans was about 65 percent by 2016:Q2.\n  - Household debt-to-income ratio about 90 percent by 2016:Q2, significantly below the Euro Area average.\n- HETA settlement paves the way for closure on legacy of the global financial crisis.\n- Phasing in of a systemic risk buffer for bank capital of up to 2 percent over 2016-19 remains appropriate."
    },
    {
      "heading": "Risks to the outlook",
      "content": "- Main risks are external: increasingly inward-oriented policies by trading partners, structurally weak growth in advanced economies, slowdown in emerging markets, or increase in risk premia in global interest rates.\n- Potential mitigating factors: European Single Market stability and declining bank exposure to risks in Central and Eastern Europe due to subsidiary divestments.\n- Rising house prices warrant attention, though current real estate-related financial risks are assessed as limited."
    },
    {
      "heading": "Fiscal sustainability and public finances",
      "content": "- Fiscal structural balance projected to turn to a deficit of some ¾ percent of GDP in 2016 due to the tax reform.\n- Authorities’ fiscal plan: gradual reduction of the structural deficit to ½ percent of GDP (Austria’s medium-term objective, MTO) by 2020.\n- Debt projections:\n  - Public debt expected to fall to some 71 percent of GDP by 2022, aided by the HETA deal and bank restructurings.\n  - Without additional measures, ageing would increase expenditure by some 3 percentage points of GDP and push public debt above 100 percent of GDP by 2060.\n- To keep reducing debt toward 60 percent of GDP over the long term, additional measures are required to counteract ageing-related spending pressures."
    },
    {
      "heading": "Key policy recommendations (comprehensive, coordinated package)",
      "content": "- Structural reforms:\n  - Lower barriers to entrepreneurship and competition in professional services and other heavily regulated professions.\n  - Reduce administrative burdens on companies, including start-ups.\n  - Lower barriers to investment in network sectors.\n  - Note: start-up promotion package and increased support for R&D in 2016 are steps in the right direction.\n- Public investment:\n  - Increase public investment focused on infrastructure bottlenecks.\n  - 2015: gross budget investment (including capital transfers) was 3.7 percent of GDP, resulting in net investment below ½ percent of GDP.\n  - Offset increased investment by efficiency-improving savings in government consumption.\n- Shift the tax mix:\n  - Revenue-neutral shift away from labor taxation (including social security contributions) toward property, pollution, and consumption to raise employment and output.\n  - Protect low-income households via the social assistance system if adversely affected.\n- Raise labor force participation (LFP) of the elderly and women:\n  - Bring forward increases in pension age for women, tighten early retirement options, and index pension age to life expectancy.\n  - Make full-time work more attractive for women (including extension of kindergarten and school hours where needed).\n  - Introduce incentives to work beyond the official pension age.\n  - Continue integrating accepted asylum seekers (language training, skills recognition).\n- Ensure fiscal sustainability:\n  - Maintain path toward a structural fiscal balance target of -0.5 percent of GDP by 2020.\n  - Achieve significant savings in health and (to a lesser extent) education sectors, and in subsidies, without compromising quality.\n  - Combined expenditure savings in these areas could amount to 2½-3 percent of GDP, allowing debt reduction below 60 percent of GDP over the long term and financing additional growth-enhancing policies.\n  - Adjust fiscal relations between federal, state, and municipal governments to improve incentives and efficiency; implement detailed action plans and efficiency targets following recent framework agreement between federal government and states.\n- Raise banks’ capital:\n  - Authorities should enforce capital strengthening along the envisaged path, using full range of tools available.\n  - This would bolster financial stability and position banks to finance private investment if credit demand recovers.\n- Strengthen macroprudential tools:\n  - Pass draft law giving the Financial Market Authority expanded responsibilities for development and application of real estate-specific macroprudential tools as soon as possible.\n  - Implement measures to stimulate housing supply response in major cities (review zoning regulations and other restrictions on construction).\n- Improve the AML/CFT framework:\n  - Strengthen the framework in line with recommendations of the 2016 FATF Mutual Evaluation Report: enhance AML/CFT supervision effectiveness, improve investigation and prosecution of money laundering, and strengthen use of financial intelligence.\n  - Mission welcomes the authorities’ action plan and encourages rapid implementation.\n\nSource: IMF, \"Austria: Staff Concluding Statement of the 2016 Article IV Mission\", December 13, 2016, IMF Communications Department.\n\n---\n\n\n References\n\n- Austria and the IMF\n- The IMF and the Fight Against Money Laundering and the Financing of Terrorism\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission"
    }
  ],
  "bullets": [
    "[Markdown version](/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/index.md)",
    "[Structured JSON version](/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/index.json)",
    "[Bundle manifest](/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/bundle-manifest.json)",
    "Published: December 13, 2016",
    "Austria is characterized as \"stable and prosperous\" but can improve economic performance to raise incomes and employment within a stable macroeconomic environment.",
    "2016 growth projected at 1.4 percent, an improvement over the average growth of 0.6 percent in 2012-15.",
    "Growth drivers in 2016: private consumption (supported by income tax reductions), recovery in investment, and higher public consumption due to spending on refugees.",
    "Inflation: 1.4 percent y/y in October 2016; above the Euro Area average (0.5 percent).",
    "Employment growth picked up in 2016, absorbing rising labor supply from migration and higher labor force participation; unemployment stabilized but remains elevated relative to historical levels.",
    "2017 projection: growth to slow marginally to 1.3 percent as 2016 fiscal stimulus tapers off.",
    "Medium-term without reforms: growth reverts to potential rate estimated at just above 1 percent.",
    "With the output gap turning positive, inflation is expected to run somewhat above 2 percent in the medium term.",
    "Reform scenario: a comprehensive reform package could permanently boost potential GDP by some 3 percent over the medium term.",
    "Current account surplus expected to rise to close to 2½ percent of GDP in 2016.",
    "Medium-term projection: current account surplus to gradually decline to about 2 percent of GDP, broadly in line with the average over 2012–15.",
    "70 percent of Austria’s exports go to the European Single Market.",
    "International investment position has strengthened further.",
    "Banking system as a whole is well capitalized, but large banks’ capital buffers remain low compared to peers (gap reduced recently).",
    "Bank profits increased in 2015/16, largely due to lower risk provisioning and higher profits in a few Central and Eastern European markets; operational costs are being cut only slowly.",
    "Credit dynamics:",
    "HETA settlement paves the way for closure on legacy of the global financial crisis.",
    "Phasing in of a systemic risk buffer for bank capital of up to 2 percent over 2016-19 remains appropriate.",
    "Main risks are external: increasingly inward-oriented policies by trading partners, structurally weak growth in advanced economies, slowdown in emerging markets, or increase in risk premia in global interest rates.",
    "Potential mitigating factors: European Single Market stability and declining bank exposure to risks in Central and Eastern Europe due to subsidiary divestments.",
    "Rising house prices warrant attention, though current real estate-related financial risks are assessed as limited.",
    "Fiscal structural balance projected to turn to a deficit of some ¾ percent of GDP in 2016 due to the tax reform.",
    "Authorities’ fiscal plan: gradual reduction of the structural deficit to ½ percent of GDP (Austria’s medium-term objective, MTO) by 2020.",
    "Debt projections:",
    "To keep reducing debt toward 60 percent of GDP over the long term, additional measures are required to counteract ageing-related spending pressures.",
    "Structural reforms:",
    "Public investment:",
    "Shift the tax mix:",
    "Raise labor force participation (LFP) of the elderly and women:",
    "Ensure fiscal sustainability:",
    "Raise banks’ capital:",
    "Strengthen macroprudential tools:",
    "Improve the AML/CFT framework:",
    "[Austria and the IMF](http://www.imf.org/external/country/AUT/index.htm)",
    "[The IMF and the Fight Against Money Laundering and the Financing of Terrorism](https://www.imf.org/en/about/factsheets/sheets/2023/fight-against-money-laundering-and-terrorism-financing)",
    "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "alternates": {
    "markdown": "/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/index.md",
    "json": "/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/index.json",
    "bundleManifest": "/en/news/articles/2016/12/13/mcs12-13-2016-austria-staff-concluding-statement-of-the-2016-article-iv-mission/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-25T20:26:47.544Z"
}