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Forecast. Next year will bring rest. However, the third block makes negative scenarios come true.
Vienna Rarely has an economic forecast from Wifo and IHS come true as quickly as Friday morning. In an online presentation, IHS chief Martin Kocher and Wifo chief Christoph Badelt were about to present their institutes’ assessments for next year. It is already a difficult undertaking, as “economic development follows the number of infections,” as Kocher explains. And the pandemic “economically and healthily” has become a “wave function” that is difficult to predict. However, his institute expects growth of 3.1 percent in the next year, after less than 7.5 percent this year. This time, Wifo has prepared not just one forecast, but two: without a third block there should be a strong 4.5 percent lead, with a block that will decline to 2.5 percent.
While economic researchers are still in the process of talking about possible scenarios, the first concrete reports of a third lockdown will be circulating in mid-January. The reality will now be more on the lockdown stage, Badelt said. Although this is a bit more difficult to assume (four week lockdown in February, which is important for tourism). Kocher explains in an initial reaction that the new lock will definitely be felt. However, he does not believe this will significantly change the IHS annual forecast. If the lockdown achieves its goal, there could be more economic activity, and therefore a stronger recovery.
Tourism and trade
It is clear that the sectors that have been most affected by the restrictions since March 2020 will also be the most affected by the third blockade, in particular tourism. In 2020, according to Wifo, there was a total decrease of 37 percent in the number of overnight stays. In the current winter season, however, the situation looks much bleaker. The Christmas business has already been fully developed. And even if hotels and restaurants will be able to welcome guests again from mid-January, economists expect them to be primarily residents due to travel warnings. In total, they forecast a 70 percent decline for winter tourism. However, the effects on unemployment will be significantly less because the temporary workers who are now unemployed come mainly from abroad.
In retail, the important Christmas business was partially saved with the opening in December. And even if the sale can only start late this year, dealers can expect later purchases. In any case, the third shutdown will increase the number of commercial employees in part-time jobs, economists are sure.
Industry
The good news in the forecasts is that, unlike what happened in the spring, the industry was able to continue producing largely normally after the second lockdown. International value chains are now largely unaffected by national closures, it is said. As a result, the second lockdown was also much easier for the entire economy to digest. And that should also be the case with the third. According to Badelt and Kocher, state aid, such as the investment premium, also helped. They wanted to say that investments only fell 5 percent in 2020.
Private consumption
With less than 8.3 percent, the fall in private consumption was much more pronounced in 2020. On the one hand, because the shops and inns were closed and there was no way to consume. On the other hand, because people were more cautious when it came to spending money and some had less disposable income due to unemployment or short-term work.
However, overall, the savings rate has risen significantly this year, to more than 14 percent, according to Kocher. And that meant that the Austrians were able to put around ten billion euros on the high edge. This money is also the great hope for the year 2021. Then consumption should grow again by six percent and therefore significantly support the recovery of the economy.
(“Die Presse”, print edition, December 19, 2020)
