The downward trend in the domestic economy in the previous year was halted at the end of the year. Following the decline in GDP in the second and third quarters of 2023, initial calculations for the fourth quarter of the WIFO flash estimate indicate a slight increase (in each case compared to the previous quarter). However, this means that economic output is still below the previous year's level.
According to current calculations of the Weekly WIFO Economic Index (WWWI), the trend is likely to have stabilised further in the first half of January. Economic output was down ¾ percent on the previous year, following a decline of around 1¾ percent in November and December.
Business activity in the retail trade was again subdued in November (+1.8 percent in value terms, –2.2 percent in volume terms compared to the previous year) and December 2023 (+1.2 percent in value terms, –2.8 percent in volume terms, preliminary figure). Sales growth was again weak in the non-food sector in particular.
In total, the domestic retail trade generated net sales of around 75.3 billion € in 2023. In volume terms, this corresponds to a decline of 3.6 percent.The preliminary sales results for December indicate that the Christmas-related increase in sales is below the long-term average, as expected in the WIFO Economic Outlook for the Austrian Retail Association from mid-December.
After briefly rising to 5.6 percent in December (November: 5.3 percent), inflation fell again in January 2024 according to Statistics Austria's flash estimate (4.5 percent according to CPI, 4.3 percent according to HICP). It was therefore once again above the euro area average (2.8 percent), although the inflation differential has recently weakened slightly.
Sentiment among Austrian retail companies has recently improved again following a gradual deterioration until autumn 2023. Since the October survey, the proportion of companies surveyed that are more optimistic about the economic situation has gradually increased. However, pessimistic assessments still predominate (January –10.1 points, December –10.3 points).
The improvement in sentiment among retail companies in recent months is reflected in both the current situation and expectations. The increase was particularly pronounced in December, especially in the assessment of the current situation (+5.2 points). In January, companies reported a (slightly) worse sentiment (–2.5 points).
Following a decline in domestic consumer confidence in autumn 2023, sentiment has gradually improved since then. In the last two months in particular, the proportion of pessimistic assessments has decreased in favour of optimistic assessments. In Germany, contrary to the domestic trend, sentiment has tended to deteriorate since summer 2023. Domestic consumers are currently more optimistic about the coming 12 months, both in terms of their own financial situation and total economy development.
Private consumption did not provide any growth impetus in 2023. In 2024 and 2025, private household consumer demand is expected to rise again (+1.6 and +2.0 percent respectively) as a result of the increase in the volume of disposable household income.
The current weak economic development is also reflected in the labour market. The number of unfilled vacancies continued to fall in both the retail trade and the total economy and was already 24.6 percent below the previous year's level in January in the retail trade (–18.9 percent in the total economy). There are currently 10,659 vacancies (total economy: 87,155) that cannot be filled promptly.
