Following strong rebounds in investment and exports, economic activity is set to remain buoyant through 2018 and, to a lesser extent, 2019. Unemployment will continue to decline and labour market participation will rise further, in particular for women and older workers. Inflation remains higher than in other euro area countries, mainly driven by prices in sectors that are little exposed to international trade.
Job creation could be further enhanced by facilitating job-matching. Residential mobility is low, held back by non-portable social housing entitlements and residence-dependant access to social services. Labour participation of parents is impaired by a lack of full-day schooling and childcare in rural areas. Dedicated life-long learning solutions and greater supply of apprenticeship positions in rapidly digitalising professions would help the transition to the digital economy.
The indebtedness of the non-financial private sector remains moderate compared with other advanced countries. Business investment is mainly financed by internal sources reducing vulnerabilities but also holding back innovation. Bank lending dominates external financing, suggesting room for deeper private capital markets to diversify funding. House price dynamics have raised some concerns in recent years, but pressures have eased somewhat in 2017 as residential construction has picked up.
Economic Survey of Austria (survey page)