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A continued improvement in the OeNB’s GDP indicator signals a more favorable economic forecast for 2020



07/08/2020

Vienna (OTS) – The Oesterreichische Nationalbank (OeNB) currently makes a weekly demand-side estimate of GDP based on real-time data. The current results show a further improvement of the economy in Austria. The activity level for the Austrian economy during calendar weeks 30 and 31 was 4.0 percent and 3.8 percent lower than the previous year’s values. The Austrian economy is recovering somewhat faster than expected. The data for the last few weeks indicate a pronounced V-shaped economic trend. Provided that there is no strong second wave of COVID-19 infections, the Austrian economy may therefore collapse less in 2020 than expected in connection with the OeNB forecast from the beginning of June. From an economic point of view, the OeNB also points out the importance of actively containing a possible second wave of infection, as the neck risk risks for economic development are large. The current results from the national accounts estimate the flow for the second quarter of 2020 underlines the high accuracy of the OeNB̵

7;s GDP indicator of the week.

Signs of further economic recovery in Austria

For calendar weeks 30 (20 to 26 July) and 31 (27 July to 2 August), real-time data indicates a further economic recovery. The total truck distance during calendar week 31 was only 1½ percent below the previous year’s value, the mileage that was relevant for export activity in the border sections 4½ percent. Electricity consumption – a meaningful indicator for industrial production – was about 5 percent below the previous year’s figure in July. During the months from April to June, the decline was twice as great. The recovery in industrial production is also reflected in the latest results from the Purchasing Managers’ Index. The index returned to the growth area of ​​52.8 points. The data on payment transactions indicate a further small improvement in private consumption and in domestic tourism. Overall, the GDP gap narrowed to 4.0 per cent and 3.8 per cent during the calendar weeks 30 and 31, respectively.

A pronounced V-shaped business cycle emerges

For the further economic development during the second half of 2020, the weekly development of the new indicator so far provides important insights. After GDP fell by a quarter from year to year at the height of the closure at the end of March / beginning of April, the GDP gap had narrowed to 7½ per cent at the end of the second quarter. The recovery process continued at the beginning of the third quarter. With a fall to less than 5 percent, the GDP gap was lower than expected in July. A pronounced V-shaped economic trend is therefore emerging.

The current results of the weekly GDP indicator based on real-time indicators thus show that the recovery could take place faster than was often expected. Provided that there is no other wave of infections, the Austrian economy may therefore experience a less severe decline in 2020 than was forecast in the OeNB forecast from the beginning of June. Instead of 7.2 percent, real GDP in 2020 would only “shrink” by about 6 percent. The course of the OeNB GDP indicator in the coming weeks will show the extent to which this assessment is carried out. However, the risk for this forecast remains clearly low. If a stronger second wave of infection cannot be prevented, the recession in Austria will be more severe than expected in the June forecast. The successful containment of the coronavirus and a possible second wave of infection remain an important common challenge for politicians and the population, even from an economic perspective.

OENB GDP indicator with high forecast quality

The results of the current lightning estimate of the national accounts show that Austria’s gross domestic product (GDP) decreased by 13.3 per cent in the second quarter compared with the same period last year (12.8 per cent not adjusted for seasonal and working days). The weekly OeNB GDP indicator indicated this economic downturn quickly and accurately – the random estimate derived from the indicator was -14.5 percent. After individual data publications such as overnight stays and production indexes had already confirmed partial results of the weekly GDP indicator OeNB, he has now managed to pass his first real “moose test” with the national accounts.

Exact estimate of private consumer spending

The estimate of private consumer expenditure has proved to be particularly accurate. The most important demand for GDP is calculated using the payment provider’s data and cash deliveries. The adjusted decline in private consumer expenditure year after year according to the national accounts estimate (–15 per cent) corresponded almost exactly to the OENB estimate (–14.7 per cent).

After the weekly GDP indicator has been able to accurately depict the historical economic downturn, the next few weeks will now show to what extent this also applies to economic situations that are much closer to a “normal” interval.

This week’s GDP indicator is published on the OeNB’s website: https://www.oenb.at/Publikationen/corona.html



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