Austrian economy on recovery path, expected to grow in 2014

The Austrian economy is set for recovery and is expected to grow 1.75 percent in 2014 on the back of increased exports, experts have revealed on Friday. However, weak domestic demand would dampen a further improvement, the Austrian Institute of Economic Research (WIFO) and the Institute of Advanced Studies (IHS) said in their economic prognoses. In addition the labor market would remain weak, something that could worsen further. To further improve the situation the two institutes both put forward six key priorities they said Austria would need to focus on to strengthen its international competitiveness, including education, innovation, research and development, tax cuts and reduction in labor costs. The top importance should be given to reducing the budget deficit and debt, the experts agreed. WIFO Director Karl Aiginger said the Austrian budget was on course for "zero deficit by 2016," though he said bank rehabilition costs as well as public sector spending would need to be factored into this. The public sector made up for 50 percent of GDP spending, he added, and thus would need to be reigned in.