Austria is expected to show an initial economic upswing compared to 2013. Based on improved economic indicators in the 2nd half of 2013 and increased German and US demand for exports, an increase in gross domestic product can already be expected in the 1st half of 2014. According to the Austrian Institute of Economic Research (WIFO), economic growth will be approximately 1.7% for 2014 as a whole. This means that Austrian economic growth should be approximately one half percentage point higher than the Eurozone in both 2014 and 2015.
According to the October forecast by the International Monetary Fund (IMF), government finances will not deteriorate seriously, with the structural deficit forecast to be 1.8% and 1.5% of gross domestic product in the coming two years, respectively. Only vague estimates exist at this point concerning the increase in national debt due to the emergency nationalisation of Hypo Alpe Adria. The estimates range from an additional 4% to 6% of GDP.
The Austrian banking system is currently in a restructuring phase. Nationalisations have been performed in previous years, but not all of the restructuring processes have been concluded. There is generally a feeling of confidence, however, with respect to stress testing of Austrian banks by the European Central Bank.
On international financial markets, Austria continues to receive an AA+ rating from Standard & Poor's. No unexpected challenges are anticipated at the regulatory level for Austrian insurance companies. The process of preparing for Solvency II has already been underway for a number of years with the participation of affected stakeholders and involves considerable expense. The funding of nursing care is a topic that could still generate further discussion at the political and insurance industry levels.
The market forecast by the Austrian Association of Insurance Companies (VVO) predicts premium growth of 1.9% in 2014. This means that the insurance industry should grow faster than gross domestic product. At the same time, the overall forecast is being depressed by the life insurance segment, which is expected to record a decrease of 1.1% in premiums. The positive growth in health (+3.2%) and property & casualty insurance (+2.2%) will, however, overcompensate for this drop. Another mitigating factor is the fact that life insurance premiums are likely to receive a boost from the statutory regulations that entered into effect on 1 March 2014 and reduce the tax-relevant minimum lock-in period for single-premium life insurance policies back to ten years for people 50 years and older.