Economic Outlook

WIFO and IHS expect recession in 2025

As part of their spring forecast, both the Austrian Institute of Economic Research (WIFO) and the Institute for Advanced Studies (IHS) presented their GDP forecasts for 2025 and 2026. Both institutes pointed out that Austria is in the longest recessionary phase since the Second World War. The continuing gloomy mood among companies was emphasized. Surveys and leading indicators have not yet shown a turnaround, and the tariff increases announced by the US would also have a negative impact on export expectations in particular. The construction industry should grow in 2025, due to the housing initiative adopted last year, and against the backdrop of several interest rate cuts. It is expected that the savings rate, which has risen noticeably in previous years, will be reduced again and that consumption will once again make a positive contribution to growth. The two research institutes expect growth rates of -0.3% and +1.2% (WIFO) and -0.2% and +1.1% (IHS) for 2025 and 2026, respectively, although these forecasts were published before US President Trump's announcement of drastic tariffs. In light of recent events, we have lowered our forecast for 2025 to negative growth of -0.5%.