Austria

HEAD-EMU

Country Analysis

Austria


 

The probability of Austria making the first cut for EMU remains quite high. Austria’s rising debt burden remains a major concern for the future of this nation. Nevertheless, the close political and monetary ties between Austria and Germany will result in a high probability that Austria will be in the first cut of nations to join in 1999.Austria remains in the middle of a recessionary trend with poor economic growth, which in turn has prevented Austria’s efforts at fiscal consolidation. While most expect an improved performance during 1997 with an economic growth rate of 2.1%, compared to the 1996 growth rate of only 1%, such general expectations may prove to be too optimistic. Nonetheless, achieving a growth rate of 2.1% appears necessary in order to accomplish the deficit/GDP ratio target of 3%.

Political relations within Austria between the Social Democrats and the Christian Democrats who make up Austria’s grand coalition remain tense but should insure that EMU will still be on track as the national goal. This grand coalition should complete its full-term to December 1999 thus insuring at least consistent political support for EMU.


 

 

1995 1996e 1997f
ERM Member……… Y Y Y
Inflation………………… 2.2 1.7 2.1
Budget Deficit / GDP 5.5 4.3 3.1
Debt / GDP…………… 69.0 71.7 72.2
10Y Bond Yields…….. 7.1 6.3 6.0
f=forecast e=estimate

 

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