The Financial Express

Austrian economy suffers historic 11 per cent slump in second quarter

Workers are pictured at a construction site in Vienna, Austria, March 09, 2017 — Reuters/Files Workers are pictured at a construction site in Vienna, Austria, March 09, 2017 — Reuters/Files

The Austrian economy shrank 10.7 per cent in the second quarter, marking its biggest contraction since the data series began after World War Two, as the coronavirus pandemic hit both domestic and foreign demand, thinktank Wifo said on Thursday.

Wifo, which compiles data for the government, said the most heavily affected sectors included retail, hotels, restaurants, sports and entertainment.

After the government under Chancellor Sebastian Kurz imposed a lockdown in early March, unemployment in the country increased to its highest level since figures began in 1946, rising above 12 per cent to more than half a million people.

The number has declined since but was still at 432,000 last week. To save jobs, the government introduced a so-called Kurzarbeit scheme in March, which provides at least 80 per cent of pay for employees who work reduced hours but are expected to return to full time.

The scheme, currently benefiting 475,000 of Austria’s 4.4 million-strong labour force, runs until March next year, way longer than comparable models in other European countries.

Private spending in the April-June period fell 12 per cent in the wake of shop and restaurant lockdowns, Wifo said. The retail, hotel, restaurant and maintenance sector saw a 24 per cent slump.

Investments and exports dropped 8.0 per cent and 13 per cent respectively, comparable to the financial crisis of 2008/09.

Austria’s coronavirus outbreak has been relatively limited compared with other Western European countries. It has recorded 20,889 cases and 718 deaths, though as in many other countries, infections have accelerated in recent weeks.

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