WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

The economy has had to deal with the blow caused by Russia’s invasion of Ukraine. Steep rises in the cost of energy and other imported inputs will push the inflation rate close to 20% this year. A decline in household and business sentiment alike means that consumption and investment activity will lose momentum in the second half of this year, and particularly in 2023. The government is trying to counter the loss of households’ purchasing power and to assist enterprises with energy support measures. It should also manage to keep economic activity afloat with its planned public investments. We expect real GDP to grow by 2.1% in 2022, to be followed by a slump to 0.9% in 2023 and then an upswing to 2.6% in 2024.