The moderate economic recovery in the eurozone is expected to continue. Economic analysts in Austria expect a boost to the economy for 2016 as a result of the tax reforms that came into force as of 1 January 2016, as well as an increase in government expenditures for transfer payments. The headwind in the global economy has in recent times increasingly come from the emerging nations in Asia and Latin America and from the national economies dependent on raw materials. By contrast, the economic conditions in most of the core countries in Central and Eastern Europe are expected to be supported by solid macroeconomic structural conditions. The four countries in Central Europe (Poland, Slovakia, Czech Republic and Hungary) can once again expect real economic growth of more than 3 per cent, and the recovery is also generally strengthening in Southeastern Europe. If the recovery in the oil price on the global markets fails to materialise in the medium term, this will increase the uncertainty regarding the performance of the Russian economy following the recession in 2015. Continued financial and macroeconomic stabilisation in Ukraine would also be accompanied by a slow normalisation in the business environment.
Price developments remain muted in the eurozone and in many countries in Central and Eastern Europe, and deflation can also be expected to some extent. Against this background the European Central Bank’s highly expansionary monetary policy can continue to be expected, with a similar policy implemented by some of the central banks in CEE as a result. UNIQA is therefore adjusting to a very low general interest rate environment which will last even longer.
UNIQA is launching the biggest innovation programme in its corporate history in 2016, and will be investing around € 500 million over the next few years in “re-designing” its business model, establishing the staff expertise required for this and in the IT systems required. These significant investments in the future will to a large extent take effect in 2016 and will be reflected in changes to the expected results. Combined with the ongoing difficulties with the structural conditions, such as an economic outlook which remains moderate, sustained low interest rates, falls in investment income and political uncertainties in certain markets, UNIQA expects earnings before taxes to fall by up to 50 per cent for the 2016 financial year, compared with the very good results for 2015.
Despite the investments and challenging economic environment, UNIQA intends to continue increasing its annual distribution per share over the next few years as part of a progressive dividend policy.