Boston, MA -- (SBWIRE) -- 07/07/2014 -- CORE VIEWS

- Net exports have been a key driver of economic growth over the past decade for Austria. However, declining cost competitiveness and subdued demand from regional trading partners, most notably Germany, will see the contribution to real GDP growth of this component remain subdued in the years ahead.
- Gazprom's South Stream pipeline will continue to receive support from the Austrian government despite the threat of EU sanctions if the line is constructed. Bulgaria, where South Stream enters mainland Europe, has already been warned about the potential of EU infringements, and we believe a similar threat to Austria would place strains on Vienna's relationship with Brussels.
- The nationalist Freedom Party of Austria (FPO) performed worse than we had anticipated in the European Parliamentary elections in May, coming third behind the parties of the governing coalition; the centre-left Social Democrats and centre-right People ' s Party. However, we do not believe this marks the start of a decline for the FPO as a political force. Eurosceptic sentiment is still strong in Austria and support for the two main parties likely to be hit by the establishment of a partly taxpayer-funded ' bad bank ' for nationalised lender Hypo Alpe Adria .

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MAJOR FORECAST CHANGES

- On the back of the one-off fiscal impact of the Hypo Alpe Adria 'bad bank' on the government balance sheet we have raised our forecast for Austria's budget deficit to 2.8% of GDP in 2014, from 2.6% previously. However, given the government's overwhelming long-term commitment to eliminating the budget deficit, at the expense of government funded projects and public sector pay, we believe the deficit will narrow in subsequent years, reaching a surplus by 2021.

KEY RISKS TO OUTLK

- We forecast Austrian consumer price inflation to reach 2.0% y-o-y and 2.3% y-o-y by end 2014 and 2015 respectively, from 1.6% y-o-y in April, on the back of rising housing costs (rents in Austria were up 4.1%...

The Austria Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Austria and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Austria's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

- Forecast the pace and stability of Austria's economic and industry growth through end-2017.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
- Contextualise Austria's country risks against regional peers using BMI's country comparative Risk Ratings system.
- Evaluate external threats to doing business in Austria, including currency volatility, the commodity price boom and protectionist policies.

The Austria Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Austria economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Austria through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Austria Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.

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