Tuesday 30 June 2009

IMF Sees Austria's '09 GDP -4%,'10 At Around Zero

IMF Sees Austria's '09 GDP -4%,'10 At Around Zero

VIENNA -(Dow Jones)- The global economic downturn will hit Austria harder than assumed by local forecasters, the International Monetary Fund said Tuesday, presenting its latest country report for the nation in Vienna.

The IMF expects Austria's economic output to contract by 4% in 2009, and come in flat against 2009 in 2010.

On June 26, the country's main forecaster, the Austrian Institute of Economic Research, or Wifo, pegged the 2009 contraction at 3.4%, while it said it expected to see 0.5% growth in 2010.

The IMF said Austrian exports in particular have been severely affected by the global downturn, while private consumption has proven relatively resilient until now.

IMF economist Paul Hilbers, who heads the organization's monetary and financial systems department, commended the Austrian government for acting in a swift and determined way to the crisis through fiscal stimulus and financial system stabilizing measures, but he also said politicians need to consider how to reduce the budget deficit in the medium and long term.

Hilbers added that the IMF doesn't think the threat to the Austrian financial system from massive credit defaults in eastern Europe - where Austrian banks are heavily exposed - is as serious as many have suggested.

"We don't see a threatening default scenario. Austrian banks are facing a difficult time in eastern Europe, but I wouldn't call them threatened," Hilbers said.

-By Flemming E. Hansen, Dow Jones Newswires; +43 1 513 69 22 10; flemming.hansen@dowjones.com

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(END) Dow Jones Newswires

June 30, 2009 07:27 ET (11:27 GMT)

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