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A second lockdown “would be an extreme burden” on Austria’s economy and jettison economic forecasts for this year and 2021, Wifo chief Christoph Badelt said on Tuesday. Badelt does not fear a collapse of the national economy in the sense that it “can no longer get what it wants to buy”, but something like a progressive lockdown is emerging for the very important winter tourism. This is solely due to travel advisories and the growing number of infections both in Austria and in the countries where Austrian vacationers potentially come from, as the director of the Institute for Economic Research (Wifo) said in Ö1 lunch magazine. For a tourism company, it is ultimately irrelevant “whether it has to close because no guests are coming or whether it is ordered to close.”
The more or less collapse of winter tourism alone could depress the growth rate by as much as one and a half percentage points, according to Badelt. “We have more than half the usual annual production value in tourism in winter tourism.”
What a second blockade would mean economically
So far, Wifo has seen a decrease in gross domestic product (GDP) of 6.8 percent for this year and an increase of 4.4 percent is expected next year. But that was calculated assuming Austria will control the corona pandemic next year and that a second lockdown will not be necessary, Badelt said. Wifo also expected alternative scenarios with lockdown: in this case, economic output would decline by more than 9 percent this year and next year there would be more or less stagnation. “The unemployment rate would also increase enormously,” said the Wifo boss.
Now politicians are being asked. Without economic countermeasures, bankruptcies and unemployment would rise further. It depends a lot on the extent to which the government currently extends temporary measures such as short-time work or fixed-cost subsidy.
Christoph Badelt
Image: APA / GEORG HOCHMUTH
Relief measures “not all have arrived yet”
It is good to put the truth on the table. “If the numbers stay that high, we will face an even more massive economic crisis simply because of the collapse of winter tourism,” Badelt said. And if there were a blockage of other economic sectors due to the growing number of infections, the public sector would have to “dig much more in its pockets” than is currently planned in the budget to maintain operations. In response to criticism that state aid came too late and inadequately, Badelt said: “A large-scale economic stimulus program is already underway, but it is true that not all has yet.” You have to see if this is due to bureaucratic hurdles. With many economic stimulus programs, the effect is delayed a bit.
