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5a6bd75a40a5e0d3578c0a2a075f2349403cf83a928f2013c0d8f85d862e0f4b;;[{"layout":"detailed","uid":28210,"publicationDate":"29 Jun 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183650.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPRjevfYGAe4I4tua3mCuHw=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Downside risks to growth building (3Q22)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> GDP growth will probably slow to 3.0% this year (previously 3.3%) and 2.8% next year (from 3.4%). Headwinds from the Russia-Ukraine conflict have combined with COVID-19 lockdowns in China to push inflation up further and slow the pace of economic activity. Central banks have become even more hawkish. Tighter financial conditions, a squeeze in real incomes and a sharp downturn in consumer confidence will increasingly weigh on activity. Trade is weakening, also reflecting a switching of expenditure away from goods. Global inflation will probably peak soon, but the speed and extent of the subsequent decline remains highly uncertain. We think that central banks and markets are underestimating the downside risks to growth. If Russian energy imports suddenly stop, much of Europe will likely see negative GDP growth for 2023.<\/li><li><strong> US: <\/strong> We forecast GDP growth of 2.4% this year and below-potential growth of 1.3% next year. Economic momentum is slowing, particularly for interest-rate-sensitive sectors such as housing and durable goods. CPI inflation will likely peak at about 9% yoy in 3Q22, with monthly inflation prints likely easing to levels consistent with target by around the turn of the year. Longer-run measures of inflation expectations are still well anchored and average hourly earnings growth is moderating. We expect the Fed to raise the target range for the federal funds rate into restrictive territory by the end of the year, to 3.25-3.50%, which we see as the peak. Rate cuts could start in late 2023.<\/li><li><strong> Eurozone: <\/strong> GDP is likely to expand by 2.8% this year and by 1.3% in 2023. Survey indicators signal a weakening of growth momentum in the spring and downside risks for economic activity in 2H22. Headline and core inflation have further to rise, although we see initial signs that pipeline price pressure might start easing soon from extremely high levels. Weak growth and slowing inflation will probably force the ECB to stop hiking in 1Q23 once the depo rate reaches 1.25%, i.e. the lower end of the 1-2% range the central bank regards as 'neutral'. We expect the announcement of a credible anti-fragmentation facility featuring potentially unlimited purchases and light conditionality.<\/li><li><strong> CEE: <\/strong> The EU-CEE economies will likely grow on average by 3.6% in 2022 and 2.6% in 2023, with the Western Balkans lagging. Turkey could grow by 4.4% in 2022 and 3.3% in 2023. In Russia, the economy could shrink by around 10% this year and stall next year. Hungary and Slovakia would experience the biggest direct impact from a lack of Russian energy imports, followed by Bulgaria, Czechia and Serbia. Inflation is likely to peak this year in most CEE countries, except for Hungary and Poland, where the peak could be postponed to 2023. Inflation is expected to remain well above targets in 2023. We think that central banks will end rate hikes in the autumn, but the scope for rate cuts in 2023 is very limited. The CBR could cut the policy rate to 8% in 2022 and to 7% in 2023. The CBRT might hike in 2023 if there is a change in government.<\/li><li><strong> UK: <\/strong> We forecast GDP growth of 3.4% this year and 0.6% next year. The economy will be skating on the edge of recession for the next few quarters amid a big squeeze in real disposable income. Inflation is set to stay higher for longer in the UK compared to peers, peaking at above 9% yoy in 4Q22, but should fall quickly to below 2% by end-2023. The BoE will probably stop raising the bank rate after a final 25bp hike to 1.50% in August.<\/li><li><strong> China: <\/strong> GDP will likely grow by 4.0% in 2022 and by 4.2% in 2023. While most COVID-19-related restrictions were lifted at the beginning of June, the supply side of the economy is recovering faster than the demand side as Chinese consumers continue their cautious behavior to avoid quarantines. The central government is stepping up efforts to support the economy and reduce the negative impact of future waves of contagion on the domestic economy through a combination of monetary and fiscal policy measures. The PBoC might tolerate further weakening of the CNY towards 7.00 against the USD to support exports. <\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"5a6bd75a40a5e0d3578c0a2a075f2349403cf83a928f2013c0d8f85d862e0f4b","available":"0","settings":{"layout":"detailed","size":"default","showanalysts":"2","showcompanies":"2","showcountries":"2","showcurrencies":"2","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"5"}},{"layout":"detailed","uid":27810,"publicationDate":"29 Apr 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183159.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJHlYjR85eD_wruyOF8HW5cA=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - Austria\u00b4s 1Q22 GDP: strong recovery from lockdown","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> According to the flash estimate by the Austrian Institute of Economic Research (WIFO), Austrian GDP grew by 2.5% qoq in 1Q22. After the slump in 4Q21 caused by a fourth lockdown to prevent the spread of COVID-19, the Austrian economy has made a very strong comeback in terms of growth. Austrian GDP is now 1.3% above its pre-crisis level of 4Q19. This also represents a significant year-on-year increase in GDP of 8.7% compared to 1Q21, when restrictive measures to contain the COVID-19 pandemic (third lockdown) weighed on the economy.<\/li><li> Positive growth impulses in 1Q22 came primarily from a very strong recovery in construction and industrial activity. Construction activity grew by 2.6% qoq in 1Q22 after three negative quarters in a row. It benefitted above all from strong order growth from the public sector. After posting a slight decline towards the end of 2021 (-0.3% qoq), industrial activity grew by 4.0% qoq in 1Q22. Strong new business, especially from abroad, and the interim easing of supply bottlenecks supported the recovery. Due to the easing of measures to contain the pandemic, consumer-related services were also able to grow strongly again at the beginning of the year. Value added in trade, accommodation and transport increased by 3.1% qoq. In other services, which include personal services, arts, entertainment and recreation, the increase in value added was even 9.7% qoq. Overall, services grew at the same rate as the economy as a whole, at 2.5% qoq, reaching pre-crisis levels for the first time. <\/li><li> On the demand side, 1Q22 data show somewhat surprisingly only stagnation in consumer demand, despite good development in the labor market, with record employment caused by increasing uncertainty due to accelerating inflation. There was also no further expansion in public consumption after three consecutive quarters of growth ' after the partial expiration of pandemic-related support. Investment activity, on the other hand, rose sharply, by 4.2% qoq, after a pause in the previous quarters as a result of the good order situation in industry and construction, which pushed this area to its capacity limits. Due to the high demand for capital goods, imports increased by 5.5% qoq. Exports increased by 4.1% qoq, so that a negative net-export contribution dampened economic growth in Austria in 1Q22.<\/li><li> Data for 1Q22 still show hardly any dampening effects from the Russia-Ukraine crisis. However, its negative impact on the Austrian economy should be reflected in 2Q22. While the UniCredit Bank Austria Purchasing Managers\u00b4 Index for April still shows strong growth in industry despite a decline, output expectations for the year have dropped abruptly to spring 2020 levels, when the first wave of the corona pandemic affected Austrian industry. The lifting of pandemic restrictions has improved the framework for many service sectors, particularly retail trade and hospitality. The WIFO business climate index for the services sector therefore rose in April ' as did the mood in the construction sector. However, the development of private consumption in 1Q22 has already shown that rising inflation is weighing on consumer spending and that higher costs are reducing willingness to invest. In combination with the uncertainty caused by the Russia-Ukraine crisis, we therefore expect a clear weakening of economic momentum in Austria for the coming quarters after this strong start to the year, despite the lifting of the pandemic-related restrictions in all sectors of the economy.Chart 1 shows the strong rebound by the Austrian economy in 1Q22. This more than compensated for the slump caused by the lockdown towards the end of 2021. CHART 1: STRONG START TO THE YEAR<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Walter","last":"Pudschedl","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=58&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=3fd57c090b77786eca006d6117d313af"},{"first":"Stefan","last":"Bruckbauer","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=103&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=af53d3daf995c2318755dc3e468357c2"}],"countries":[{"name":"Austria","ticker":"AT","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=16&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=efbbe7292dbde4ead0ac1e0ffba0a524"}]},{"layout":"detailed","uid":27588,"publicationDate":"30 Mar 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182906.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJW4PBk9_ILJawJy3UT8KTA=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks walk a thin line (2Q22) ","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> The economic outlook has worsened. We see global GDP growth of 3.3% this year (from 4.2%) and 3.4% next year (from 3.7%). The Russia-Ukraine crisis has caused a sharp rise in commodities prices and inflationary pressure, further global supply-chain disruption, a tightening of financial conditions, heightened uncertainty and a sharp drop in consumer confidence. Rising COVID-19 cases, notably in China, pose additional risks. Global central banks will walk a thin line as the growth-inflation trade-off deteriorates.<\/li><li><strong> US: <\/strong> We expect GDP growth of 3.0% this year and 2.2% next year, which includes a cumulative 0.3pp reduction in growth due to the Russia-Ukraine crisis. US trade and financial linkages with Russia and Ukraine are relatively small and the US economy entered the crisis in a good place, with strong household balance sheets and a very tight labor market. After likely peaking at about 8.5% yoy in the coming months, we see headline CPI inflation declining to moderately above 2% in 2023 due to base effects, lower energy prices, demand moderation and some improvement in supply bottlenecks. We now expect the Fed to hike by 125bp in the remainder of this year, up from 100bp previously, but still see the peak for the federal funds rate at 2-2.25% next year.<\/li><li><strong> Eurozone: <\/strong> Assuming that Russia continues to export oil and gas to Europe, we forecast GDP in the eurozone to expand by 3.1% this year and 2.5% in 2023. This growth trajectory is about 1pp lower than before the Russia-Ukraine conflict started. An easing of pandemic restrictions, still large amounts of excess savings for households and targeted fiscal stimulus are important mitigating factors. Our inflation forecast for 2022 has surged to close to 7%, followed by a decline to an average rate of about 2% in 2023. Facing a worsened trade-off between lower growth and higher inflation, the ECB confirmed its hawkish pivot and announced a plan to speed up the reduction of net asset purchases in 2Q22, aiming to end QE in 3Q22. We still expect two 25bp hikes in 1H23, although risks have shifted toward a first move taking place already before year-end.<\/li><li><strong> CEE: <\/strong> We expect the Russian economy to shrink by around 12% this year (peak-to-trough of around 20%), with a muted rebound in 2023 akin to stagnation. In EU-CEE and in the Western Balkans, GDP is expected to grow by around 2.3% in 2022 and by 3.6% in 2023. For this group, we estimate the direct impact of the conflict on GDP growth at 1.5-3pp in 2022 and up to 1.5pp in 2023. Turkey could grow by around 4% this year and 3.8% in 2023. If the EU stops importing oil and gas from Russia, the Russian economy could shrink by around 20% this year and fail to rebound in 2023. In such a scenario, EU-CEE and the Western Balkans would probably fall into recession. Inflation could reach 30-year highs due to rapidly rising commodity prices and supply-chain bottlenecks, prompting additional rate hikes and FX interventions.<\/li><li><strong> UK: <\/strong> We forecast GDP growth of 3.4% this year and 1.8% next year, after revising down growth by a cumulative 0.6pp due to the Russia-Ukraine crisis. The UK imports little from Russia but, as a net importer of commodities, it faces a substantial terms-of-trade shock. Inflation will likely peak at about 8.5% yoy in April and stay high through 3Q23 before falling below 2% in 4Q23. The MPC will likely raise the bank rate to 1.25% by August and then stop.<\/li><li><strong> China: <\/strong> We expect GDP to grow 4.7% in both 2022 and 2023. New outbreaks of COVID-19 that are forcing millions of Chinese into new lockdowns will likely weigh on economic performance in 1H22, adding to headwinds from the Russia-Ukraine conflict, rising commodity prices and real estate vulnerabilities. However, the government has signaled it will deploy further policy support to ensure stable economic performance and mitigate domestic and external growth headwinds. An easing in fiscal and monetary policy is likely.<\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":27127,"publicationDate":"01 Feb 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182303.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAJxzQYtJcAx8WUU0hKm_2Q=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - Austria: Lockdown and supply bottlenecks cause GDP to decline in 4Q21?","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> According to the flash estimate by the Austrian Institute of Economic Research, WIFO, Austrian GDP declined by 2.2% qoq in 4Q21 following two quarters of strong growth. However, the Austrian economy grew by 5.4% yoy. After the Austrian economy exceeded its pre-crisis level in 3Q21, GDP at the end of 2021 was again around 1% lower than in 4Q19. Based on this flash estimate, economic growth for 2021 as a whole was 4.8% (UniCredit: 5.0%) following a 6.7% decline in 2020. <\/li><li> As was the case in the final quarter of the previous year, the decline in GDP was mainly due to a tightening of measures to curb the spread of the coronavirus. At the end of November, a general lockdown came into force for 20 days, as well as a lockdown for the unvaccinated. In addition, some countries issued travel warnings for Austria. These measures led to significant losses in many service sectors, albeit significantly lower than in the final quarter of last year, as the restrictions were less severe and companies have adapted their business models, for example by offering delivery services. In trade, accommodation, catering and transport, value added decreased by 5.6% qoq in 4Q21 (4Q20: -14.4% qoq). In other services, which include personal services, arts, entertainment and recreation, the decline was as much as 5.8% qoq (4Q20: -12.8% qoq). The burdens on these service sectors were reflected in a 1.4% qoq decline in private consumption.<\/li><li> The decline in GDP at the end of 2021 was nevertheless slightly higher than in the previous year (4Q20: -2.0% qoq), as the supply bottlenecks resulted in a 1.7% drop in value added in industry and a 1.4% qoq decline in construction. By contrast, both sectors had grown in 4Q20 (industry: +1.4% qoq; construction: +0.7% qoq).<\/li><li> We are optimistic that the Austrian economy will not slip into another technical recession this winter but will return to growth in 1Q22. Health policy restrictions have meanwhile been eased significantly. As of 1 February, the lockdown for the unvaccinated will also be lifted, as vaccination will become mandatory as of that date. This has improved the general conditions for many service sectors, especially the trade and the hospitality industry. The WIFO business climate index for the retail sector rose noticeably after the slump toward the end of 2021. In the service industries as a whole, the index rose slightly and is now in positive territory. The UniCredit Bank Austria Purchasing Managers\u00b4 Index for the manufacturing industry also showed a significant increase to 61.5 points in January. Signs of a slight easing of supply problems and cost increases, as well as the more favorable demand situation, have improved the immediate outlook at the beginning of 2022 and increased companies\u00b4 optimism. <\/li><li> With further easing of measures in the spring, a strong comeback of the services sector should significantly increase the pace of recovery of the Austrian economy and thus enable it to quickly end the winter dip. Moreover, the recovery should gain even more momentum if the unwinding of supply problems contributes to broad-based growth support from industry and the construction sector.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Walter","last":"Pudschedl","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=58&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=3fd57c090b77786eca006d6117d313af"},{"first":"Stefan","last":"Bruckbauer","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=103&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=af53d3daf995c2318755dc3e468357c2"}],"countries":[{"name":"Austria","ticker":"AT","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=16&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=efbbe7292dbde4ead0ac1e0ffba0a524"}]},{"layout":"detailed","uid":26246,"publicationDate":"28 Sep 21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181231.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZU6taDmKjrKk=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks head for exit (4Q21)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> Growth has peaked, and we are fine-tuning our global GDP growth forecast for this year, to 5.8% from 6%, and for next year, to 4.6% from 4.7%. The spread of the Delta variant has weighed on demand over the summer, while shortages of materials and labor continue to constrain supply and will probably last into 2022. Growth is likely to remain robust next year, thanks to accumulated household savings, inventory restocking, and the declining economic effects of each new wave of COVID-19. However, growth rates will naturally ease as pent-up demand, fiscal support and spare capacity fade. Inflation will likely remain high through year-end before moderating as base effects turn negative and supply starts to adjust. Central banks will continue to chart a gradual exit from emergency measures.<\/li><li><strong> US: <\/strong> We now expect GDP growth of 5.8% this year (from 6.1%) while our forecast for next year is 3.9% (from 3.8%). This is the result of a downward revision to growth in 3Q21 and slightly stronger growth early next year. GDP is likely to reach its pre-pandemic trend line in 1Q22, a quarter later than previously expected. Inflation is close to peaking but will likely remain elevated well into next year as supply disruption looks set to last longer than anticipated. We continue to see inflation falling back towards 2% by end-2022. The Fed will likely start tapering its QE in November and cease net purchases around mid-2022. We expect the first rate hike in early 2023, followed by a second hike in 2H23.<\/li><li><strong> Eurozone: <\/strong> GDP is likely to expand by 5% this year and by 4.3% in 2022. Activity is set to increase strongly again in 3Q21, followed by slower growth at the turn of the year as the reopening boost fades and manufacturing output slows. GDP will probably recover to its pre-pandemic level by year-end. Prospects for 2022 remain positive, supported by deployment of NGEU funds, but activity is unlikely to return to its pre-crisis trend before 2023. Inflation will probably peak in November at close to 4%, before falling sharply over the course of next year. The ECB seems keen to close the PEPP in March. If so, maintaining easy financing conditions and a smooth transmission of monetary policy would require stepping up the pace of the APP and increasing its flexibility.<\/li><li><strong> CEE: <\/strong> We expect economies in EU-CEE and in the Western Balkans to grow by around 6% in 2021 and 4.6% in 2022. Turkey\u00b4s economy could expand by 9.7% in 2021 and 5.5% in 2022. In Russia, GDP growth could slow from 4% in 2021 to 2.4% in 2022. In 2021, the recovery has been driven by pent-up consumer demand\u00a0and exports. In 2022, investment could contribute more to growth, helped in EU-CEE by NGEU disbursements, in Russia by spending from the National Wealth Fund and in Turkey by easier financial conditions. Supply-chain bottlenecks, rising energy prices and buoyant consumer demand could keep inflation outside target ranges for longer than central banks currently expect. Further monetary tightening is needed to ensure price stability.<\/li><li><strong> UK: <\/strong> We are lowering our GDP growth forecasts to 6.4% for this year (from 6.7%) and 5.9% next year (from 6.1%), delaying the time when we expect GDP to surpass its pre-pandemic level by one quarter to 2Q22. Inflation is set to rise to almost 4% in 4Q21 and remain there through 2Q22, before falling back to close to 2% by end-2022. The MPC seems prepared to raise rates as soon as February, but we expect lower growth and higher unemployment to delay a hike until late 2022\/early 2023.<\/li><li><strong> China: <\/strong> We are reducing our GDP growth forecast for 2021 to 8.2% from 8.5%, and for 2022 to 5.0% from 5.7%. The summer turned out to be challenging due to a mix of natural disasters and the spread of the Delta variant. Looking beyond 3Q21, there are several headwinds that might dent the economic outlook, from abrupt state interventionism to rising vulnerabilities in the real estate sector and an economically-damaging 'zero tolerance' approach to COVID-19. Fiscal and monetary policy are likely to remain accommodative. <\/li><\/ul>","synopsisDe":"","synopsisIt":""}]

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Walter Pudschedl
Economist
Bank Austria
Schottengasse 6-8 -
A-1010 Vienna
Austria
+43 50505-41957

Walter Pudschedl is an economist at Bank Austria, based in Vienna. Since 2007 he concentrates in his work on macroeconomic analysis on Austria and its federal provinces with a special focus on busi...

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