Austria’s markets and ETF, may finally be past the nadir of their economic downtrend after some positive economic indicators and mixed news from the financial sector came in.
Driven by declining exports and investments, Austria’s GDP diminished 2.6% in the first quarter, as stated in Forbes. But the WIFO conducted a survey in which Austrian companies are showing some signs of stabilization, and further declines in the coming quarters are expected to be less dramatic.
On Monday, Bank Austria announced that its economic indicator rose to -2.5 in May, up from -2.9 in April, according to Reuters. This is the first rise in the country’s economic indicator since March 2007, marking a possible trough in the recession.
The Austrian Central Bank projects the economy will contract 3.5% for 2009, and decline 0.3% in 2010. Austria’s economy could take up till 2013 to reach pre-crisis levels.
Consumer confidence is on the rise as tax reforms start to help the economy. Business confidence is being boosted by favorable price trends and slower decline in orders.
Austria’s finance ministry said its $139 billion stimulus package was sufficient, denying a newspaper’s report that it wasn’t, the Guardian reports. A spokesman, however, said the ministry did expect some banks to ask for $20 billion in cash injections.
Risk in Austrian banks is widely spread and most banks are retail banks with high levels of primary funding from customers. This means they finance loans from deposits and not on the basis of interbank financing.
- iShares MSCI Austria (NYSEARCA:EWO): up 21.7% year to date.
Max Chen contributed to this article.