Economic environment

The year 2024 was characterised by continued weakness in the manufacturing industry worldwide. In Europe, France, Germany and Austria were particularly affected by the difficulties in the industrial sector. In contrast, the service sector proved to be much more robust. The Purchasing Managers’ Index for the eurozone rose to 52 points in the summer, indicating solid growth in the service sector. Overall, economic growth in the eurozone is estimated at around 1 per cent for 2024. Spain led the way with an increase of just under 3 per cent, followed by France with around 1 per cent and Italy with 0.7 per cent. Germany stagnated, while Austria brought up the rear in the eurozone with a GDP decline of 0.7 per cent.

The improvement in the financial environment in 2024 had a supporting effect. The European Central Bank (ECB) lowered interest rates four times during the year, each time by 25 basis points, as inflation had fallen significantly compared to previous years. The inflation rate in the eurozone fell steadily over the course of the year and stood at 2.2 per cent in December, in Austria it was even below 2 per cent.

In contrast, political crises, particularly in the core countries of the EU, and the ongoing war in Ukraine weighed on the economy. Despite this, the labour market remained robust: No significant increase in the unemployment rate was recorded in 2024, nor is one expected for 2025.

However, the renewed discussion about the Maastricht criteria for national budgets, which force highly indebted countries to implement austerity measures, is dampening sentiment and could put further pressure on the economy.

In the USA, the economy remained extremely robust in 2024 and grew by more than 2 per cent. Inflation fell less sharply than expected and stood at around 2.7 per cent in December. The Federal Reserve Bank reacted cautiously and only lowered the Fed Funds Target Rate to 4.5 per cent.

China’s industry, like that in Europe, is in crisis. In addition, the long-standing problems in the property market have recently worsened: Work on many unfinished buildings is at a standstill throughout the country and many new buildings are currently unsaleable. China is trying to compensate for the difficult situation with an export offensive, which is often supported by dumping prices.

The increase in tariffs announced by the new US President Trump poses a challenge for China and the global economy. Depending on the specific implementation of this measure and the level of the tariffs, they could further exacerbate the already tense economic situation and place a considerable burden on global trade.

The bond markets were characterised by high volatility in 2024 but were largely unchanged at the end of the year. Austrian government bonds with a ten-year term yielded 2.8 per cent both at the beginning and at the end of the year. Italian government bonds performed positively, while French bonds were weaker.

Record gains were recorded on the global stock markets in 2024, particularly in the USA. The S&P rose by 34 per cent, the MSCI by 25 per cent, the DAX by 18 per cent and the Austrian leading index ATX by 12 per cent.