Page 16 - KELAG Annual Report 2019
P. 16

growth  of  1.7%  and  1.5%,  respectively,  for  2019;  growth
                                                                  rates in the latest forecasts were also lowered to 1.4% and
                                                                  1.3%, respectively, for 2020. In Austria, growth slowed in
                                                                  2019  primarily  in  the  wake  of  modest  global  economic
                                                                  development.  Momentum  in  exports  and  industry
                                                                  decreased significantly and expansion in investment was
                                                                  noticeably  more  moderate.  As  a  compensatory  effect,
                                                                  private consumption remained a key economic pillar. The
                                                                  positive  development  in  employment,  the  strong  wage
                                                                  increases  and  the  family  bonus,  which  will  probably
                                                                  continue to have an expansive effect in the coming year, led
                    The global economy continues to expand only moderately.   to strong growth in real income.
                    In the first three quarters of the financial year 2019, the rate
                    of  growth  slowed  again  in  the  developed  economies.   Initially,  there  was  a  delayed  reaction  to  the  economic
                    Global  sentiment  indicators  also  continue  to  show  a   slowdown in the Austrian labour market. For this reason,
                    downward trend, and global economic uncertainties, such   there was a strong rise in employment again in 2019, and
                    as trade tensions, remain high. Nevertheless, there are no   the  unemployment  rate  according  to  the  international
                    signs  of  a  global  recession.  Financing  conditions  remain   definition  fell  to  4.6%  (2018:  4.9%).  In  2020,  the
                    favourable  owing  to  loose  monetary  policy,  fiscal  policy   development of employment is likely to decline noticeably.
                    provides stimulus for economic activity in some places, and   The growing supply of labour is expected to slow, however,
                    consumption  by  private  households  continues  to  grow   which means that the unemployment rate is expected to
                    strongly in many countries. The Organisation for Economic   remain essentially unchanged.
                    Cooperation  and  Development  (OECD)  anticipates  weak
                    economic growth for 2019 and 2020. According to current   The rate of inflation was already slowing noticeably around
                    forecasts  from  the  fourth  quarter  of  2019,  the  year  was   the end of 2018 and is also likely to remain moderate in the
                    expected  to  end  with  global  economic  growth  of  2.9%.   forecast period. For 2020, the WIFO expects an increase in
                    Growth of 3.0% is forecast for 2020.          consumer prices of 1.7% (2019: 1.6%).

                    Economic growth also remained moderate in the majority
                    of EU states and in the euro zone. Most recent estimates
                    project annual economic growth in the euro zone for 2019
                    to be around 1.1%, following 1.9% in 2018. In 2020, GDP is
                    expected to increase by 1.2%. The key interest rate of the
                    European Central Bank (ECB) has been at an historic all-time
                    low  of  0.0%  since  March  2016  and  the  ECB  continues to
                    insist on continuity in its low interest rate policy.

                    The Austrian economy is expected to see a reduced growth
                    rate in 2020, as it did in 2019. The latest available forecasts
                    by the WIFO (Austrian Institute for Economic Research) and
                    the IHS (Institute for Advanced Studies in Austria) projected
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