How the pandemic pushed Austria into a record economic downturn

How the pandemic pushed Austria into a record economic downturn
A waiter serves customers at a café in Vienna on May 15th, as the country reopened cafés and restaurants. Photo: Joe Klamar/AFP
Austria's measures to fight the coronavirus have led to its worst economic slump since the Second World War, according to the country's main research institute.

The Austrian Institute of Economic Research (WIFO) estimates that Austria's GDP slumped by 10.7 percent in the second quarter of 2020 compared to the first three months of the year.

“The economic effects of the Covid-19 pandemic have, as expected, led to a recession of historic proportions,” WIFO said.

The hit to the economy in the first quarter was 2.4 percent, according to the institute's estimates.

The two successive quarters of negative growth mean this is Austria's first recession since 2009.

“The measures taken to contain the pandemic brought with them a massive drop in consumer demand,” WIFO said in a statement.

 

Between April and June, several sectors experienced an average year-on-year contraction of 27.8 percent, namely trade, vehicle servicing and repair, transport and hospitality.

Those areas accounted for almost half of the damage to economic growth in the second quarter of 2020.

Export demand has also slumped as the world grapples with the virus, according to WIFO.

The institute recently estimated Austria would experience a contraction in GDP of 7 percent over the whole of 2020 before recovering with growth of between 4.3 and 5.8 percent in 2021.

Austria went into a strict coronavirus lockdown in mid-March and began progressively relaxing restrictions in mid-April.

Despite the emergence of several infection clusters in recent weeks, Austria has escaped the worst of the pandemic so far.

The EU member of just under nine million people has recorded more than 20,900 cases of the novel coronavirus and 718 deaths.