global economy

Pandemic pushes Austria into record economic downturn

Agence France-Presse, Agence France-Presse
Pandemic pushes Austria into record economic downturn

General view over St Wolfgang, Austria, and the Wolfgangsee lake on July 26, 2020. - The number of people infected with the novel coronavirus that can cause the COVID-19 disease is rising in the Upper Austrian touristic spot of St Wolfgang. (Photo by KERSCHBAUMMAYR / various sources / AFP) / Austria OUT

Austria's gross domestic product slumps by 10.7% in the 2nd quarter of 2020, driving it into a recession

The measures taken to combat the new coronavirus pandemic have led to Austria’s worst economic downturn since World War II, the country’s main research institute said Thursday, July 30.

The Austrian Institute of Economic Research (WIFO) estimates that Austria’s gross domestic product (GDP) slumped by 10.7% in the 2nd quarter of 2020 compared to the first 3 months of the year.

“The economic effects of the COVID-19 pandemic have, as expected, led to a recession of historic proportions,” WIFO said.

The hit to the economy in the 1st quarter was 2.4%, according to the institute’s estimates.

The two successive quarters of negative growth mean this is Austria’s first recession since 2009.

“The measures taken to contain the pandemic brought with them a massive drop in consumer demand,” WIFO said in a statement.

Between April and June, several sectors experienced an average year-on-year contraction of 27.8%, namely trade, vehicle servicing and repair, transport, and hospitality.

Those areas accounted for almost half of the damage to economic growth in the 2nd quarter of 2020.

Export demand has also slumped as the world grapples with the virus, according to WIFO. 

The institute recently estimated Austria would experience a contraction in GDP of 7% over the whole of 2020 before recovering with growth of between 4.3% and 5.8% in 2021.

Austria went into a strict coronavirus lockdown in mid-March and began progressively relaxing restrictions in mid-April.

Despite the emergence of several infection clusters in recent weeks, Austria has escaped the worst of the pandemic so far.

The European Union member of just under 9 million people has recorded more than 20,900 cases of the novel coronavirus and 718 deaths. – Rappler.com