Austria’s economy will expand by 0.5 percent this year driven by the growth of its northern neighbor Germany, the Austrian central bank said, revising upward its previous forecast of a 0.3 percent increase.
The central bank raised its forecast after the economy developed better than expected in the second quarter, Governor Ewald Nowotny told journalists late yesterday in Alpbach, Austria. The central bank expects gross domestic product to grow by 0.3 percent quarter-on-quarter in the three months to September, and by 0.5 percent in the final quarter of the year, he said.
“We can revise upwards our forecast for 2013, even as the revision is only modest,” said Nowotny, who is also a member of the European Central Bank’s rate-setting governing council. “We will depend very much on Germany, which shows a rather positive development and is to a certain extent an economic locomotive.”
Austria’s economy gained pace in the second quarter as exports increased, the Wifo institute said earlier this month. The Alpine republic is closely linked to Germany’s economy, which consumed 31 percent, or 37.8 billion euros ($50 billion) of its exports last year, thanks to Austrian companies like steelmaker Voestalpine AG, a supplier of parts to German carmakers.
German GDP expanded 0.7 percent in the three months through June, after stagnating in the first quarter as a colder-than-usual winter curbed output.