More optimistic forecasts for 2010
The economic recovery that could already be seen in 2009 may continue in the coming months, according to the estimates of economists, and should result in GDP growth for Austria of 1.5% in 2010. A GDP growth of 1.5% is also expected for Germany as well, while the economy in the euro region should grow by 1.1% overall in 2010. However, the recovery is still considered unstable and is subject to a number of risks, and no acceleration is expected in 2011 from the current perspective. According to current forecasts, the USA may even outpace the euro region in 2010 with a gain of 1.7%. China will hold its place as the world’s major economic mover with an expected GDP growth of 9.0%. Worldwide, economic output should grow by 3.0% in 2010.
In Central and Eastern Europe, experts currently expect further declines in the Baltic countries, Romania, Bulgaria and Hungary, while the Polish and Czech economies should expand thanks to the more stable consumer demand. In the eight new EU Member States, the economy should remain stable in 2010 at +/–0.0% following the average losses of 3.8% in the preceding year.
The slight economic recovery notwithstanding, forecasts for the Austrian insurance industry in 2010 currently predict premiums to decline by a total of 1.3%. Health insurance is expected to continue growing by 2.5% while premiums in property and casualty may decline by 0.5%. The negative trend in life insurance will continue with an expected drop in premiums of 3.0%. According to current expectations, motor vehicle insurance will also remain in decline (–3.0%).
Financial markets more approachable
Caution is still advised when attempting to predict future developments on the international financial markets. In the area of interest, upward movement is expected for money market rates while the prime rates may remain unchanged in both Europe and the USA until further notice. The stock markets seem much more approachable after the rallying of prices in recent months. Should the economic environment continue to recover, the stock prices should tend to rise further on the basis of improved company results. However, particularly following the strong price gains of recent months, the possibility of setbacks cannot be ruled out. After several successful capital increases at the end of last year, the Vienna Stock Exchange expects more new members in 2010. In the bond markets, experts expect a continuing upward trend for long-term yields both in the USA and in Europe. The main factors for this are the improving economic conditions and the associated prospect of a trend toward streamlining of monetary policy.
