IHS forecast: Economy will grow by around one percent annually until 2030

IHS-Chef Holger Bonin therefore called for further, courageous reform steps in pensions and health for budget reasons. “The recent reforms are not enough. They only achieved a draw, which doesn’t help anyone if you want to become champion,” said Bonin at a press conference on Thursday. The government should extend the deadline and use Germany as a role model. Taboos have been cleared up there and a mandatory additional pension has been introduced.

Bonin once again critically assesses the effects of the previous reforms. “We don’t have a good handle on the planned additional income for the budget because no one knows what effect the parcel tax will have.” On the expenditure side, the economist puts savings on the budget ÖBB expansion plans in question. This would only push costs into the future, which could become a problem later. The cuts in pension spending, in turn, do not have an impact on growth. He sees the increase in unemployment insurance contributions for low wages as positive; this could increase the volume of work.

Geopolitical uncertainties: Economy is quite adaptable

The forecast is also subject to considerable uncertainty due to the volatile global situation. However, Bonin puts it into perspective, it turns out that the economy is quite adaptable to crises. The crisis scenarios for oil and raw materials that were expected after the outbreak of the Iran war did not come true, especially since the flow of goods is also being redirected.

The IHS assumes that distortions in the Iran war can be overcome quickly, but the forecast does not indicate any further escalation, although this is at least to be feared based on developments in the past few days. The expected economic growth of an average of one percent per year until 2030 is still significantly lower than the average of 1.9 percent over the past five years.

Inflation is falling again

Also Inflation is likely to fall again. However, the IHS still expects inflation to rise by 3 percent this year. From 2028 onwards, the ECB inflation target of 2.0 percent should be achieved in this country. On average, the institute expects consumer prices to increase by 2.3 percent per year by 2030.

Demographic developments continue to weaken the labor supply – keyword: Shortage of skilled workers. Coupled with moderate employment growth, the unemployment rate should fall from 7.5 percent this year to 6.4 percent by 2030. Employment is expected to increase by 0.6 percent per year.

Specifically, the institute is assuming growth of 0.8 percent this year. It expects 1.0 percent in 2027. For the period from 2028 to 2030, increases in Austria’s economic output of 1.2 percent, 1.1 percent and 1.0 percent are forecast. This means that the Austrian economy will expand almost as strongly as the euro area in the forecast period.

International forecasts and Austro exports

The growth of important national economies exceeds that of Austria, and the Eurozone is also expected to grow slightly faster at 1.1 percent. The global economy is expected to grow by an average of 2.8 percent per year. Here too, the starting point is that the Iran war does not escalate and the situation with energy prices eases. The economy of the world’s largest economy, the USA, is expected to grow by an average of 1.8 percent by 2030, and that of its pursuer, China, by 3.9 percent.

Domestic exports have recorded significant losses in market share in the past two years due to sharp increases in energy and unit labor costs. “However, with productivity-oriented wage agreements in industry, the price competitiveness of exports is unlikely to deteriorate any further,” writes the IHS.

According to the forecast, exports of goods will increase by 1.9 percent per year. The increase in total exports of goods and services is expected to be 2 percent. At 1.9 percent per year, total imports are expected to expand only slightly slower than exports, meaning that overall foreign trade will make an almost neutral contribution to growth.