This study presents the OeNB’s new weekly indicator of economic activity, which is based on a demand-side approach to measuring GDP and which relies on real-time data. The weekly OeNB GDP indicator (1) tracks economic development in Austria on a weekly basis; (2) provides estimates of the contributions of the main demand components of GDP; (3) focuses on seasonally adjusted year-on-year changes; and (4) considers shifts from cash to noncash consumer spending, thus taking into account behavioral changes in the use of payment instruments. The OeNB has published weekly GDP estimates since early May 2020 and has thus provided policymakers and the public with important and timely information on the state of the Austrian economy. First benchmarking results indicate that the weekly OeNB GDP indicator generated rather accurate results for aggregate economic activity in the first two quarters after the outbreak of the COVID-19 pandemic in Austria. We describe the construction and the main features of the weekly OeNB GDP indicator, present its results for the period from March to December 2020, discuss the strengths and shortcomings of our approach and draw some lessons from more than eight months of weekly nowcasting with real-time data. Indicator updates will continue to be released during the COVID-19 pandemic at https:// www.oenb.at/Publikationen/corona/bip-indikator-der-oenb.html.

Contributing 7.3% to Austrian value added, tourism is an important pillar of the Austrian economy. It has been hit particularly hard by the COVID-19 crisis. We analyze the impact of the crisis using high-frequency real-time data on payment card spending and monthly data on overnight stays. During the lockdown in spring 2020, overnight stays in Austria dropped by almost 100%. Over the summer, tourism activity recovered strongly, backed by domestic and German tourists. Nevertheless, it remained clearly below 2019 levels. In October 2020, the renewed increase in the number of COVID-19 infections led to another severe downturn in Austrian tourism, as several neighboring countries posted travel warnings. On November 2, 2020, a second lockdown started in Austria – accommodation establishments and restaurants were closed. Hence, we expect overnight stays to drop again by around 95% in November. As the Austrian government announced on December 2, 2020, Austrian accommodation establishments will not open before January 2021; on top of that, travel warnings by major countries of origin (especially Germany) will remain in place. Based on these assumptions, we estimate total overnight stays to decrease by 36% in 2020. This will be mainly attributable to a strong decline in overnight stays by foreign tourists (–41%), while overnight stays by domestic tourists will go down by only 23%. The overall decline in overnight stays could have been far stronger if the lockdown in spring 2020 and the recent shutdown had not fallen into the off-season but into the high season in winter or summer.

The lockdown measures adopted to contain the COVID-19 pandemic have sent economies worldwide into a deep recession. For the Austrian economy, the OeNB’s projections imply a decline by about 13½% in the first half of 2020, but a visible revival already in the second half of the year. In general, the projections are based on two key assumptions: first, that we are not going to see a second wave of infections in the fall of 2020, and second, that coronavirus drugs or vaccines will be available by mid-2021. Based on these assumptions, real GDP in Austria is expected to contract by 7.2% in 2020, but to recover some lost ground thereafter with growth rates of 4.9% in 2021 and 2.7% in 2022. This means that it will take until 2022 for real GDP to return to pre-pandemic levels. The unemployment rate (Eurostat definition) is projected to rise to 6.8% in 2020 before dropping to 5.3% in 2022. HICP inflation is expected to sink to 0.8% in 2020, remain at this level in 2021 and re-accelerate to 1.5% in 2022. The general government deficit (Maastricht definition) is forecast to rise to 8.9% of GDP in 2020, reflecting comprehensive temporary fiscal stimulus packages and automatic stabilizers, before shrinking markedly to 1.5% of GDP in 2022.

Economic activity in Austria has been sharply curbed by the ongoing COVID-19 pandemic. During the first-wave lockdown, the OeNB’s weekly GDP indicator registered a decline of economic output by one quarter. After the exit from lockdown, the GDP gap narrowed very rapidly, amounting to –3½% compared to previous year levels in the first half of October. Among the hardest-hit sections of the economy, tourism benefited from markedly stronger domestic demand during the summer, which limited the year-on-year decline in overnight stays to 15% in July and August. Meanwhile, the travel alerts newly issued by a number of countries for Austria since mid-September have been taking their toll, though. For October, real-time data on card payments already point to a 40% decrease in overnight stays. In contrast, export performance has been improving, mirroring the slight upward trend in the production sector. By September, the decline in goods exports had dropped to a small percentage according to the OeNB’s export indicator. Looking ahead, the ongoing rapid rise in infection rates constitutes downside risks to growth, however. While the GDP forecasts for 2020 (about –7%) are fairly solid given strong third-quarter performance, the recovery projected for 2021 may turn out to be below the range currently expected (+4½ to +5%). The recovery in the labor market has already been slowing down. Registered unemployment exceeded the year-earlier mark by 71,000 unemployed individuals by mid-October and thus a mere 30% of the peak measured in April, but unemployment has been shrinking at a decreasing pace. The early warning system for impending layoffs implemented by Public Employment Service Austria points to more layoffs coming in the weeks ahead. Inflation has been highly volatile in 2020 so far, reflecting energy price fluctuations as well as one-off effects (fashion clearance sales started later usual) and price measurement problems. In September, HICP inflation came to 1.3%. In line with the OeNB’s inflation forecast of September 2020, HICP inflation is expected to run to 1.4% in 2020 and to climb to 1.7% in 2021.

Osterreich weist eine – im europaischen Vergleich – uberdurchschnittlich hohe Produktivitat je geleisteter Arbeitsstunde auf. Im Zeitraum seit dem Beitritt zur Europaischen Union im Jahr 1995 bis zum Jahr 2017 liegt das Niveau rund 20% uber jenem der EU-28, allerdings 6% unter dem des wichtigsten Handelspartners Deutschland. Diese Abstande haben sich im Beobachtungszeitraum von 1995 bis 2017 nicht wesentlich verandert. Das Produktivitatswachstum ist in Osterreich – einem internationalen Trend folgend – von 2% vor der Wirtschafts- und Finanzkrise auf unter 1% danach zuruckgegangen. Die Ergebnisse einer Shift-Share-Analyse zeigen, dass das gesamt¬wirtschaftliche Produktivitatswachstum durch das Wachstum innerhalb einzelner Branchen erklart wird, wahrend der Strukturwandel das gesamtwirtschaftliche Produktionswachstum dampft. Branchen mit einer hohen Produktivitat haben zugunsten von Branchen mit einer niedrigen Produktivitat an Bedeutung verloren. Angebotsseitig wird mehr als die Halfte des Produktivitatswachstum in Osterreich von der Gesamtfaktorproduktivitat getragen. Auf makrookonomischer Ebene ist ein enger Zusammenhang zwischen dem Produktivitatswachstum je geleisteter Arbeitsstunde und der Veranderung der Gewinnquote in Osterreich zu beobachten. Nach einem Anstieg um 7 Prozentpunkte erreichte die Gewinnquote im Jahr 2008 mit 37 % ihren Hohepunkt im Beobachtungszeitraum und ging anschliesend auf 31% im Jahr 2017 zuruck. Ein ahnlicher Zusammenhang ist fur Profitabilitatsmase auf Basis von Bilanzkenn¬zahlen nicht zu erkennen.

OESTERREICHISCHE NATIONALBANK 1 Executive summary Following a strong expansion, the Austrian economy has reached a mature phase of the cycle. Supported by robust domestic demand and a solid export performance, real GDP growth is now projected to reach 2.7% in 2018, same as in 2017. Despite the downward revision by 0.4 percentage points compared with the June 2018 outlook, a rate of 2.7% does not signal a weakening of the underlying cyclical strength: By and large, the reassessment can be traced back to revised historical data. Looking further ahead, GDP growth is expected to slow down to 2.0% (2019), 1.9% (2020) and 1.7% (2021) in line with the weakening global economy. In other words, the Austrian economy has peaked and is now gradually moving onto a stable growth path. The unemployment rate (Eurostat definition) is projected to drop to 4.9% in 2018, and to continue to inch downward thereafter, to 4.7% in 2019 and 2020 and to 4.5% in 2021. HICP inflation is expected to remain stable at 2.1% in both 2018 and 2019, before dropping to 2.0% in 2020 and further to 1.9% in 2021. The general government stands to run a balanced budget in 2018 and is projected to achieve a surplus of 0.5% of GDP by 2021. In parallel, the debt­to­GDP ratio is expected to drop to 64.8% by 2021, from 78.3% in 2017. The global economy continues to expand. Both the group of advanced economies – supported by robust growth in the U.S.A. – and the group of emerging market economies have been growing at a brisk pace. At the same time, global developments have been less synchronized than previously: In late 2017 and early 2018 numerous regions had witnessed a temporary growth dip, from which they reemerged in the second half of 2018, however. While global output growth is expected to remain comparatively stable in the next few years, global trade growth will continue to decelerate, driven above all by the trade dispute between the U.S.A. and China. The growth setback that Germany, Austria’s most important trading partner, expe­ rienced in the third quarter of 2018 is seen as a temporary phenomenon amid the struggles of the German automotive industry to meet the new emission requirements. The Austrian export industry has been doing well in 2018 so far, even though the growth of demand for exports has gone down after the boom year of 2017. Given broad regional diversification, real export growth is projected to level off only slightly in 2018, to 4.2%, compared with 4.6% in 2017. To a large extent, these results are attributable to goods exports to Central, Eastern and Southeastern Europe (CESEE) economies, which grew at a nominal rate of 10% in 2018, i.e. at almost twice the rate of goods exports to all other countries. With annual export growth figures of close to 4% for the period from 2019 to 2021, exports will continue to be a key driver of the Austrian economy in the years ahead. Austria’s manufacturing industry has been keeping up its investment drive given strong demand in international markets. On a cumulative basis, investment in machinery and transport equipment grew by as much as 20% from 2015 to 2017, and this trend appears to have continued in 2018, with 4.1% growth measured for

Real gross wages per worker have experienced a very subdued development since the introduction of the single currency in Austria. Average hourly wages, on the other hand, have evolved more dynamically. Between 1999 and the Great Recession, the wage share decreased continuously, and wage growth was less than suggested by the “Benya rule.” However, having increased significantly in the aftermath of the crisis, the wage share has been fairly constant in recent years. In 2017, the wage share was only slightly lower compared to that in 1999. The institutional specifics of Austrian wage setting are unique for a developed country (neo-corporatist system, almost complete union coverage and highly coordinated wage setting). Despite declining union density, the system has remained virtually unchanged since the early 1980s. Arguably, joining Economic and Monetary Union (EMU) did not lead to pressures to change the wage bargaining process as Austria had already been part of the “hard currency bloc” in Europe before the introduction of the euro. Phillips curve estimations suggest that nominal wage growth in the past twenty years has been mainly determined by labor productivity and past inflation but has reacted only weakly to the cyclical stance of the economy. In addition, we analyze the effects that structural changes in the labor market and the internationalization of the Austrian economy have had on wage developments. We find evidence that the increased openness of the Austrian economy and changes in participation rates have had a dampening effect on wage growth. In contrast, we find no significant effects for changes in the share of part-time and fixed-term contracts, and in the share of foreign workers. The overall cumulative effect of EMU on wage growth in Austria is estimated to be positive.

Economic growth in Austria peaked at the end of 2017. The first half of 2018 saw a gradual return to average growth. According to the most recent figures of the OeNB’s Economic Indicator of September 2018, this trend is set to continue in the second half of the year. Based on its quarterly forecasting exercise, the Oesterreichische Nationalbank (OeNB) expects real GDP in Austria to rise by 0.6% in the third quarter and by 0.5% in the fourth quarter of 2018 (quarter on quarter; adjusted for seasonal and working-day effects), and thus to remain above the long-term average growth rate of 0.4% until year-end. Thanks to particularly strong growth early in the year, the predicted growth rate for 2018 as a whole is 2.8%, slightly higher than in 2017. External economic uncertainties such as the further course of international trade conflicts and the Brexit negotiations represent a downside risk to the present forecast. Inflation is expected to remain on a steady course over the next few years. The OeNB forecasts a HICP inflation rate of 2.2% for both 2018 and 2019, followed by a slight decline to 2.0% in 2020. The fact that inflation is set to remain above 2% for the time being can be attributed mainly to favorable economic trends and robust growth in unit labor costs. HICP inflation is not expected to slow until 2020, when crude oil prices are likely to decline. Falling rates of inflation in the energy products market are expected to be largely balanced out by rising inflation rates in the services sector over the forecast horizon. As a result, core inflation (excluding energy and food) is projected to rise from 2.0% in 2018 to 2.3% in 2019 and level off at 2.2% in 2020.

In this paper we analyze the joint distribution of wealth, income and consumption in Austria. We use data from three distinct surveys, each of which focuses on one of these components, and combine these data based on a statistical matching procedure. We find that statistical data matching does not overcome the problems connected with each of the underlying data sources but rather multiplies them. There is a likely tendency to the mean in the statistical matching procedure. Thus, the tails of the distribution emerge as particularly problematic. We document the enormous difference between the three indicators usually used for describing the joint distribution. These differences can be identified in particular for specific subgroups. Finally, we argue for using only one comprehensive source of data – the Household Finance and Consumption Survey (HFCS) – to estimate the joint distribution.

The Austrian economy is currently experiencing an upturn driven by domestic demand. Real GDP growth will accelerate to 1.4% in 2016 after expanding by less than 1% for four years in a row. This expansion is being fueled by private consumption, which has benefited from the income tax reform that entered into force in January 2016, as well as by investment in equipment. The Oesterreichische Nationalbank (OeNB) projects annual GDP growth of 1.5% for Austria in the period from 2017 to 2019. Notwithstanding robust employment growth, the unemployment rate (Eurostat definition) will climb from 5.7% in 2015 to 6.3% in both 2017 and 2018 and is expected to drop slightly to 6.2% only in 2019. While continuing to remain low at 0.9% in 2016, inflation will accelerate to 1.8% by 2019.

OESTERREICHISCHE NATIONALBANK 1 Executive summary The Austrian economy is on a roll: at 3.1%, real GDP growth is expected to reach levels in 2017 last seen in the two boom years of 2006 and 2007. The good performance of 2017 will be followed by another year of very robust growth in 2018 (+2.8%), before growth is forecast to lessen to 1.9% in 2019 and 1.6% in 2020. These figures represent upward revisions of 0.9, 1.1 and 0.3 percentage points, respectively, versus the OeNB’s June 2017 outlook for 2017, 2018 and 2019. The unemployment rate is forecast to decline continually from 6.0% in 2016 to 5.0% in 2020. The inflation rate is expected to rise from 1.0% in 2016 to 2.2% in 2017, with a slight decrease to 1.9% projected until 2020. Having gained momentum in 2016, the global economy continued to strength en in 2017. The advanced economies were instrumental in carrying growth, with all major regions (U.S.A., EU and Japan) reporting better economic performance. Economic conditions improved also in the emerging economies, but were somewhat more heterogeneous. Growth of world trade even outperformed global GDP growth in the year to date, essentially on account of the composition of global growth. Given its high import content, investment activity has been a key driver of the strong growth performance. Against this backdrop, Austrian goods exports started to rebound toward end-2016 and continued to gain substantial momentum during 2017.

The Austrian economy is currently experiencing an upturn driven by domestic demand. Real GDP growth will accelerate to 1.4% in 2016 after expanding by less than 1% for four years in a row. This expansion is being fueled by private consumption, which has benefited from the income tax reform that entered into force in January 2016, as well as by investment in equipment. The Oesterreichische Nationalbank (OeNB) projects annual GDP growth of 1.5% for Austria in the period from 2017 to 2019. Notwithstanding robust employment growth, the unemployment rate (Eurostat definition) will climb from 5.7% in 2015 to 6.3% in both 2017 and 2018 and is expected to drop slightly to 6.2% only in 2019. While continuing to remain low at 0.9% in 2016, inflation will accelerate to 1.8% by 2019.

In the first half of 2017, Austria’s economy gathered further momentum. With growth rates by 0.8% in both the first and the second quarters, Austria recorded its strongest economic growth in six years. The broad-based cyclical upswing is being underpinned by both domestic and foreign demand and will continue in the second half of the year. Based on its quarterly forecasting exercise, the Oesterreichische Nationalbank (OeNB) expects real GDP to expand (quarter on quarter) by 0.7% in the third quarter and by 0.6% in the fourth quarter of 2017. For the year as a whole, economic growth in Austria will thus come to 2¾%. Compared with the OeNB’s June 2017 outlook for GDP growth, this implies an upward revision of 0.5%. Distinctly higher growth rates were last recorded in the boom period of 2006 and 2007, when economic growth accelerated to 3½%.

In the first half of 2017, Austria’s economy gathered further momentum. With growth rates by 0.8% in both the first and the second quarters, Austria recorded its strongest economic growth in six years. The broad-based cyclical upswing is being underpinned by both domestic and foreign demand and will continue in the second half of the year. Based on its quarterly forecasting exercise, the Oesterreichische Nationalbank (OeNB) expects real GDP to expand (quarter on quarter) by 0.7% in the third quarter and by 0.6% in the fourth quarter of 2017. For the year as a whole, economic growth in Austria will thus come to 2¾%. Compared with the OeNB’s June 2017 outlook for GDP growth, this implies an upward revision of 0.5%. Distinctly higher growth rates were last recorded in the boom period of 2006 and 2007, when economic growth accelerated to 3½%.

Austria’s share of investment relative to GDP, which is high by international standards, dipped significantly in recent years. This downtrend, which was also evident in peer economies, chiefly reflected an adjustment process in a climate of weaker long-term growth. While the international trend reversed in mid-2013, Austria’s investment share continued to decline. The main reasons for Austrian companies’ current reluctance to invest can be traced back to fragile demand and deep uncertainty. Lack of access to finance is unlikely to have dampened investment activity, as the higher level of internal financing has offset the diminishing importance of bank loans. Although there is some evidence of banks tightening their lending conditions, this is unlikely to have led to credit rationing, as demand for bank loans has also fallen off. Estimations based on a structural vector autoregressive (VAR) model also show that loan supply shocks have only had a small negative impact on growth.