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Austria’s economy and related exchange traded fund (ETF) may lag a bit as the country tries to handle internal problems. But the overall economic outlook is improving.

Austria’s Central Bank chief estimates that the economy will contract by a less-than-expected 3.5% to 3.8% in 2009, reports Eva Komarek for Forbes. The country is struggling with a rising budget deficit and climbing unemployment rate, and a quick recovery doesn’t appear to be in the offing.

During the second quarter, exports dropped by 2.3%, as stated in Forbes. Austria’s economy is closely tied to that of Germany and more recently to the boost in exports to emerging European countries.

But there are a few points in favor of Austria’s economy:

  • Resilient consumer demand could improve 2010 growth estimates
  • Growth in the second quarter slowed another 0.5%, but it’s shrinking at a slower rate
  • Austria’s largest bank has stated that its economic indicator, a gauge for six-month growth, increased to -0.9 from -1.8, the best result since the start of the indicator about 20 years ago, according to Forbes
  • The prime factor for the improvement was the result of tax cuts and decline in consumer prices.

Still, there is risk stemming from a rise in commodity prices, lagging impact on corporate balance sheets and unemployment rates.

  • iShares MSCI Austria Investable Mkt Idx (NYSEARCA:EWO): up 69.9% year-to-date

ETF EWO

For more information on Austria, visit our Austria category.

Source: Austria's ETF Has More Room to Grow