## IMF Executive Board Concludes 2021 Article IV Consultation with Austria _IMF News, September 9, 2021_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2021 Article IV Consultation with Austria](https://www.imf.org/en/news/articles/2021/09/08/pr21255-austria-imf-executive-board-concludes-2021-article-iv-consultation-with-austria) ## Other formats - [Markdown version](/en/news/articles/2021/09/08/pr21255-austria-imf-executive-board-concludes-2021-article-iv-consultation-with-austria/index.md) - [Structured JSON version](/en/news/articles/2021/09/08/pr21255-austria-imf-executive-board-concludes-2021-article-iv-consultation-with-austria/index.json) - [Bundle manifest](/en/news/articles/2021/09/08/pr21255-austria-imf-executive-board-concludes-2021-article-iv-consultation-with-austria/bundle-manifest.json) ## Bibliographic details - Published: September 9, 2021 --- ### Overview and pandemic impact - Austria entered the COVID-19 pandemic from a robust economic position with significant policy space. - Real GDP declined by 6.3 percent in 2020 and contracted further in early 2021, driven by a sharp deceleration of private investment and consumption and a muted winter tourism season. - The swift and sizable policy response to the pandemic has been effective in saving lives, protecting vulnerable households, and supporting workers and firms. ### Economic outlook and projections - Growth projections: - 2021: 3.5 percent - 2022: 4.5 percent - Medium term: potential of around 1¾ percent - Near-term acceleration expected from 2021Q2 as lockdowns were progressively lifted alongside fast progress in vaccinations. - Medium-term output is expected to remain below the pre-crisis trend. - Outlook is subject to unusually high uncertainty, with near-term risks from the unpredictable development of the pandemic, particularly the threat of the delta variant and efficacy and extent of vaccinations. ### Executive Board assessment — key judgments - Directors welcomed Austria’s swift and effective policy response to the pandemic. - Directors noted the economic outlook is challenging, with the real GDP level likely to remain below its pre-COVID trend over the medium term. - Fiscal policy in 2021 struck an appropriate balance between supporting hard-hit sectors and jump-starting the economy; fiscal policy should remain flexible given high uncertainty. - Directors commended Austria’s post-crisis priorities on digital and green transformation. - Banking sector: Directors commended resilience during the pandemic but warned of emerging corporate vulnerabilities and housing market risks that should be addressed to preserve financial sector stability. ### Policy recommendations and priorities - Fiscal policy - As fiscal space remains, consider additional spending to secure a faster and more sustainable recovery. - Possible focus areas: facilitating labor reallocation, reducing Austria’s high labor tax wedge, rehabilitating corporate balance sheets, fostering green and digital transition, and mitigating economic scarring. - A few Directors cautioned that further stimulus may not be warranted amid inflationary pressures driven by supply-side constraints. - Financial sector stability - Close monitoring of the impact of the pandemic on corporate and bank balance sheets. - Provide solvency support to viable firms. - Impose binding lending limits to contain housing market risks. - Swift implementation of recommendations to strengthen supervision of less significant financial institutions. - Continue efforts to improve effectiveness of the AML/CFT framework. - Labor market and social measures - Implement more targeted measures for those disproportionately affected by the crisis. - Job creation and reallocation measures: language training, hiring subsidies, and relocation grants to address regional and skill mismatches. - Climate and green transition - Phased introduction of carbon prices, using revenue to compensate low-income and vulnerable households and to support other key reform priorities. - Adopt green budgeting practices to integrate climate considerations into fiscal frameworks. ### Selected economic indicators, 2018–22 - Output - Real GDP growth (%): 2018: 2.6; 2019: 1.4; 2020: -6.3; 2021: 3.5; 2022 (Proj.): 4.5 - Employment - Unemployment (Harmonized) (%): 2018: 4.9; 2019: 5.3; 2020: 5.5 - Prices - Inflation (%): 2018: 2.1; 2019: 1.5; 2020: 1.8 - General government finances (% of GDP) - Revenue: 2018: 48.9; 2019: 49.2; 2020: 49.0; 2021: 48.6; 2022 (Proj.): 48.2 - Expenditure: 2018: 48.7; 2019: 57.9; 2020: 54.7; 2021: 51.6 - Fiscal balance: 2018: 0.2; 2019: 0.6; 2020: -8.9; 2021: -6.2; 2022 (Proj.): -3.3 - Public debt (% of GDP): 2018: 74.0; 2019: 70.5; 2020: 83.9; 2021: 85.3; 2022 (Proj.): 82.6 - Money and credit - Broad money (% change): 2018: 8.0; 2019: 4.6; 2020: 9.7; 2021: 4.7; 2022 (Proj.): 4.3 - Credit to the private sector (% change) 1/: 2018: 4.8; 2019: 5.1; 2020: 3.7; 2021: 3.3 - Balance of payments - Current account (% of GDP): 2018: 1.3; 2019: 2.8; 2020: 2.5; 2021: 2.0; 2022 (Proj.): 2.3 - FDI (% of GDP): 2018: 0.5; 2019: 1.7 - Reserves (months of imports): 2018: 1.2; 2019: 1.6 - External debt (% of GDP): 2018: 149.8; 2019: 153.7; 2020: 164.1; 2021: 167.5; 2022 (Proj.): 145.6 - Exchange rates - REER (% change): 2018: 0.8; 2019: -0.7; 2020: -10.4 *Source: IMF Executive Board Concludes 2021 Article IV Consultation with Austria* --- ## References - [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg) - [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx) - [Austria and the IMF](http://www.imf.org/external/country/AUT/index.htm) - [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2021/09/08/pr21255-austria-imf-executive-board-concludes-2021-article-iv-consultation-with-austria_