New preliminary figures reveal that Austria suffered the worst economic slump in the EU in the last quarter of 2020.
In the fourth quarter of the year, from October to December, the Austrian economy shrunk by – 4.3 percent compared to the previous quarter.
That figure represented a bigger drop in GDP than any other EU economy for which data was available, according to the European Union’s statistical office (Eurostat).
However, it was preceded by a 12 percent growth in the third quarter of the year, when the country was fairly open and the second wave of Covid was yet to hit.
The slump in the last quarter obviously coincided with the second wave of the coronavirus pandemic, which hit Europe hard and forced countries, including Austria, to re-introduce strict lockdowns and widespread closures.
Eurostat’s “flash estimates” showed of all the member states for which data was available for the fourth quarter of 2020, Austria’s GDP recorded the largest decrease (-4.3%) compared to the previous quarter.
It was followed by Italy, whose economy shrunk by 2 percent, and France, which contracted by 1.3 percent.
When compared year on year with other European countries, Austria’s economy also showed a big slowdown.
A comparison with the previous year shows a fall in GDP of 7.8 percent. Only Spain, which had a fall of 9.1 percent GDP, was harder hit by the pandemic than Austria.
For the EU as a whole, combined GDP fell by 0.5 percent between the third and fourth quarters and 4.8 percent compared to the previous year.
Reacting to the figures, Der Standard newspaper commented Austria was doing “particularly badly” economically during the pandemic and said the depth of the recession was “surprising.” At the same time, broadcaster ORF pointed out that GDP in the Eurozone shrank by the largest amount since records began in 1996.
However, Austrian Institute for Economic Research (WIFO) boss Christoph Badelt told the ZIB2 program that the numbers were estimated and treated with caution.
Badelt said Austria’s summer tourism success could explain the plummeting GDP between the third and fourth quarters of 2020. From this higher level of economic activity in the summer, the slump would be stronger.
And he said he was certain once Covid-19 is contained, there will be a “massive upswing.”
Austria’s Double Dip
According to flash estimates from the Austrian Institute of Economic Research, the Austrian economy shrunk by 4.3% quarter-on-quarter in the fourth quarter of 2020.
The greatest losses came from services including retail, accommodation, hospitality, transport and other services, such as personal services, culture and recreation (-19.7% and -25.2% respectively). Personal consumption decreased by 8.3%, while industrial production and construction activity remained more stable (with +1 and -1.6% respectively).
The feared double-dip could not be avoided in the fourth quarter, given that lockdown measures were gradually tightened leading to almost no tourism in November.
So what can be expected in 2021? The way 2020 ended will continue in the first quarter of 2021 for now.
The current lockdown measures will stay in place at least until 7 February and schools will open only on 15 February. Restaurants and hotels will stay closed at least until March. Since tourism activity has already been very restricted since November, the entire tourism winter season will be hit hard.