Austria's economy is expected to shrink in 2023, dragged by high inflation, sharply rising interest rates and a weak international economy, but will rebound in 2024, according to forecasts by two leading economic institutes.

The WIFO expects gross domestic product (GDP) to decline by 0.8% in 2023, before recovering with 1.2% growth in 2024.

The Vienna-based Institute for Advanced Studies (IHS) estimates a 2023 GDP contraction of 0.4% and 2024 growth of 0.9%.

Both institutes said they expected an upturn in the world economy and robust growth in consumer spending, driven by rising real wages, to support the forecast recovery next year.

The IHS and WIFO expect inflation for 2023 to come in at 7.8% and 7.7% respectively. In 2024, the IHS expects 4.2% inflation; WIFO estimates it at 4.0%. (Reporting by Linda Pasquini and Tristan Veyet in Gdansk; Editing by Rachel More)