One can literally feel a breather of relief that blew some fresh air in the Vienna city, 3 square kilometers densely packed with the executive offices for Austria's financial and economic upper crust.
The Angst about more criticism on Austria's economic position after a
broadside from the IMF 2 days ago gave way to new found optimism as the Organization for Economic Cooperation and Development (
OECD) gave Austria fairly good marks in general, but issued 3 warnings in its
latest report on Austria that probably apply to all other 190 countries in the world too and had also been an
issue in the most recent BIS annual report.
These warnings concern
- Fiscal Sustainability
- Financial Strength of the banking sector
- Urgent improvement of the education sector (after hefty budget cuts in the recent past to buy fighter planes where a lot of "consultants" drove the final bill to yet unknown ridiculous levels - this is my interpretation and I hope this will finally land these consultants in court/jail)
To keep Austria's perspectives in the right dimensions as this peaceful country can hide under a pinned needle on the global map I summarize the main points and the OECD recommendation bullet pointed in their own words.
General Executive Summary
So far, Austria has weathered the global financial crisis better than other OECD countries. Even so, it is entering its worst recession in half a century. Moreover, its strong economic links with Central and Eastern Europe involve risks to GDP growth and financial stability. In the face of the crisis, the stance of monetary policy has been loosened in the euro area and measures have been taken in Austria to strengthen the liquidity and capital basis of the financial system, whilst automatic stabilizers coupled with discretionary fiscal measures also serve as a cushion.
This introduction is immediately followed by a bold recommendation to bring the financial sector back to its former conservative business attitude (sales of Ferrari's have anyway not risen much in this decade.)
But the OECD recognizes that it may be in the very own interest of Austria (once the sixth-richest country on earth) to let the debt-to-GDP ratio of currently 62.6% grow a little further if this helps stabilizing declining employment figures.
