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Economists in Austria expect some positive side effects from the devastating flood that recently hit the state of Lower Austria, which will help stimulate the struggling construction industry, accelerate the process of renewing insulation and environmental heating systems, and revitalize the trade and handicraft sectors, due to the reconstruction phase.
Holger Bonnen, president of the IHS Institute for Advanced Studies, expects the recent floods to have a slight negative impact on Austria’s economic growth and GDP.
He attributed the main reason to the fact that the GDP of Lower Austria, the state most affected by the recent floods, represents only 18% of Austria’s total annual economic output.
In contrast, economist Gabriel Felbermayr, head of the Austrian Institute for Economic Research (WIFO), predicted that the flood would lead to a slight increase in economic output, due to the expected additional demand for goods and services, the revitalization of trade, a boom in the construction sector, and the strengthening of the modernization process and the installation of environmental heating systems during the reconstruction phase.
Felber-Meyer expected a slight positive impact on GDP in the first phase.
The reconstruction process is expected to increase economic growth in Lower Austria by 0.1 to 0.2 percent, with a small overall negative impact in the end.
Economist Felber Meyer based his findings on a study conducted by the Institute for Economic Research on the overall economic consequences of the devastating flood that struck Austria in 2002. Economists estimated the loss of value added resulting from the loss of production at 0.1% of GDP, worth 180 million euros.
