On 12 September 2018 the IMF issued a report following the conclusion of consultations in Austria under Article IV of the IMF’s articles of agreement.

Austria’s economic recovery is broad-based with output expanding by 3% in 2017, boosted by the income tax cuts passed in 2016, higher public spending on refugees and a recovery in private investment in 2017. Economic growth is projected to be 3% in 2018 with a gradual return to a potential growth level of around 1.75% over the medium-term. The IMF considers that the government should take advantage of this favorable position to implement structural reforms to raise the economic growth potential through inclusive policies.

The IMF considers that although the short term fiscal outlook is favorable, further structural reforms are needed to achieve long term sustainability. With spending pressure resulting from the aging population it is important to prioritize reforms that support the sustainability of the pension system and achieve cost savings in healthcare. Adjustments in fiscal relations between federal and subnational governments could also be necessary. Fiscal consolidation should be equitable and growth friendly.

To increase economic growth and reduce unemployment the government must pursue policies to strengthen competition, enhance education outcomes, address skills mismatches and encourage the participation of women, the elderly in the labour market as well as promoting the integration of foreign nationals in the labour market. Structural and fiscal measures could increase the demand for labour by shifting the tax mix away from taxes on labour and by ensuring adequate public investment.