OeNB Chief Does Not Rule Out Another Recession Year for Austria

"When I look at the external environment, it doesn't look so good. I don't know where the boost could come from," outlines the Governor of the Austrian National Bank (OeNB), Robert Holzmann, regarding the rather bleak prospects for the domestic economy.

Europe and Austria in a Difficult Situation According to OeNB Chief

In the December forecast, the OeNB still expected growth in Austria of 0.8 percent for this year. This placed it on the more optimistic side. The Economic Research Institute (Wifo) and the Institute for Advanced Studies (IHS) predicted in December a GDP increase of 0.6 and 0.7 percent for 2025, respectively. While the global economy is "doing quite well" and especially America and China are economically more dynamic, the situation in Europe and also in Austria is significantly more difficult, said Holzmann on Tuesday at the Economic Journalists' Club. Although inflation has been well contained by the European Central Bank (ECB), the governor is concerned about the still higher inflation in services and the higher core inflation. Additionally, the uncertainty surrounding the policies of the new US President Donald Trump is burdensome for Europe.

OeNB Chief: Real Programs and Reforms Are Needed

A further interest rate cut would currently help the economy very little, as investments are hardly dependent on interest rates. Holzmann did not indicate a tendency on whether he is for or against another rate cut at the next ECB meeting. The next ECB interest rate decision is scheduled for early March. More government debt alone would also not revive the economy, according to the OeNB governor. "A real reform program is needed. Simply creating debt will not solve the problem." Real programs and reforms are needed, for example, to reduce bureaucracy or to use artificial intelligence more efficiently. A pension reform would also be necessary in Austria, as well as in other European countries.

(APA/Red)

This article has been automatically translated, read the original article here.