VIENNA, Dec 13 (Reuters) - The International Monetary Fund (IMF) on Tuesday raised its forecast for economic growth in Austria next year, citing signs of positive momentum on investment and employment in the fourth quarter as it presented its annual review of the country.
The IMF predicted gross domestic product (GDP) growth of 1.3 percent next year, up from a previous forecast of 1.2 percent, and slightly below its estimate of 1.4 percent for 2016, reflecting the fading effect of a tax cut that took effect this year.
“We are encouraged by recent high-frequency indicators that show that in the fourth quarter the economy is having good momentum with respect to investment and employment,” the IMF mission chief for Austria, Nikolay Georgiev, told a news conference.
“This creates a good basis for next year. It’s not a rounding effect. It has its basis in the solid developments in the fourth quarter,” he said of the increase.
The IMF’s forecast for next year is slightly lower than the Austrian National Bank’s estimate of 1.5 percent, but the central bank’s Governor Ewald Nowotny told reporters the difference was “mainly due to methodological differences”.
The IMF also again highlighted the capital reserves of the country’s biggest banks, which it and Austria’s central bank have regularly said are below those of their European competitors.
“Austria’s banking system as a whole is well capitalised, but large banks’ capital buffers remain low compared to peers, although this gap has been reduced recently,” the IMF said in a statement on its country review. (Reporting by Francois Murphy; Editing by Shadia Nasralla)