Net exports were neither a major contributor to growth In con trast the

Net exports were neither a major contributor to

This preview shows page 20 - 21 out of 222 pages.

Net exports were neither a major contributor to growth. In con- trast, the improvement on the labour and housing markets – the latter fuelled by the Fed’s purchases of mortgage-backed securi- ties (MBS) – supported households’ financial situation and con- fidence, thus supporting consumption as well as higher savings. Economic growth in Asia continued to outperform that of Eu- rope and the US, driven mainly by China and India. Economic growth in Japan in 2012 was up from a year ago, mainly driven by reconstruction works and recovery from the earthquake- related disasters of 2011. The Japanese government also took measures to stimulate private consumption. The euro zone, on the other hand, entered a mild recession in 2012. While doubts about the stability of the Monetary Union abated following the announcements of the European Central Bank regarding the bond purchasing programme (Outright Monetary Transactions, OMT) and Long Term Refinancing Operations (LTRO), those measures did not fully feed through to the real economy in 2012. In addition, the debt crisis continued to have an impact on pe- ripheral countries and weighed on the continent’s leading econ- omies, Germany and France. All in all, the world economy grew by 3.2% in 2012, after 3.8% in 2011. Despite Austria’s macroeconomic slowdown in 2012, it remained one of the most successful countries of the European Union. Austria had triple-A ratings from two of the three major credit rating agencies mainly due to the countries long-term stability, its competitive and diversified economy and the prudent manage- ment of fiscal resources. The long-term budget discipline and above average economic growth kept public debt at a level of 75% in 2012. In fact, the government adopted a EUR 28 billion austerity programme to reduce debt. Measures affected civil service salaries, pensions, and state-owned enterprises on the spending side while the government levied extra taxes on real estate and closed tax loopholes on the revenue side. Dynamics of economic growth turned down as the debt crisis in the euro zone caused demand for Austrian exports to slow considerably and dampened consumption growth. Investment activity was also subdued as a consequence of weak internal and external demand and lower capacity utilization. Despite the slowdown, Austria continued to grow faster than the euro zone average in 2012, with its GDP rising by 0.7%. Measured in terms of GDP per capita at approximately EUR 37,000, Austria remained one of the euro zone’s most prosperous countries in 2012. In addition, Austria had the lowest unemployment rate in the European Union at 4.3% with its highly skilled, competitive, and flexible workforce. Economic growth in Central and Eastern Europe also decelerated during 2012, with some, including the Czech Republic, Hungary, Croatia, and Serbia falling back into recession. All in all, within Central and Eastern Europe, economic growth varied in 2012 from 2.0% in Slovakia to -2.0% in Croatia. Despite worsening external conditions, exports remained the driver of growth in the
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