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The weak recovery does not solve our budget problems
🇵🇾 Paraguay /Economy & Trade

The weak recovery does not solve our budget problems

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Austria's economy is experiencing a "very moderate recovery" but not significant leaps, with forecasts predicting only 0.6% GDP growth for the year.
  • While industrial order backlogs remain stable, the manufacturing sector faces varied conditions, with the automotive industry stabilizing but the packaging industry suffering from weak consumer demand.
  • The construction sector remains in recession due to high financing costs, and the government is urged to address budget shortfalls by stimulating investment rather than relying solely on exports.

Austria's economy is showing signs of a "very moderate recovery," but significant economic leaps are not expected this year, according to Christian Helmenstein, chief economist at the Federation of Austrian Industries. While the economy returned to growth last year with a 1% GDP increase after two years of recession, the International Monetary Fund forecasts only 0.6% growth for the current year.

We can speak of an industrial corrugated iron economy.

— Christian HelmensteinDescribing the fluctuating economic conditions in Austria's industrial sector.

The business climate presents a mixed picture. The industrial confidence barometer remained positive in the second quarter but showed a downward trend. Helmenstein described the situation as an "industrial corrugated iron economy," indicating fluctuating conditions across different sectors. The automotive industry is stabilizing, but the packaging industry is struggling with weak consumer demand. The construction sector, a significant part of the Austrian economy, has been in recession for years and is unlikely to recover soon due to increased financing costs.

Despite these challenges, order backlogs in the industry have remained stable, suggesting no immediate threat of structural underutilization of capacity. Helmenstein noted that a weaker euro could benefit companies. However, the Federation of Austrian Industries emphasizes that Austria should not solely rely on an export-driven recovery. Instead, the focus should be on initiating an investment-driven upturn.

The focus is on initiating an investment-driven recovery.

— Christian HelmensteinStating the need for domestic investment to drive economic growth in Austria.

To stimulate investment, the Federation suggests measures such as differentiated depreciation models for companies, citing Italy's introduction of "hyper and super depreciation" as a successful example. The defense industry is also experiencing a boom. The government is expected to address budget deficits, and the current economic recovery is deemed insufficient to resolve these issues.

Italy, which is growing stronger, introduced so-called hyper and super depreciation to stimulate investment.

— Christian HelmensteinCiting Italy as a model for stimulating investment through tax incentives.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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