Vienna - Austria should take additional measures to protect its financial system and economy, which is closely connected to Central and Eastern Europe, the Organization for Economic Co- operation and Development (OECD) said Thursday. The country's "strong economic links with Central and Eastern Europe involve risks to GDP growth and financial stability," the group said in a report presented in Vienna.
The assets of Austrian banks in that region correspond to over 60 per cent of the country's gross domestic product (GDP).
So far, the government in Vienna has earmarked 100 billion euros (141 billion dollars) to guarantee bank deposits and to help financial institutions by injecting capital, stimulating inter-bank lending and guaranteeing bonds.
"While measures in Austria and abroad have been introduced to stabilize financial markets," the OECD said, "further financial- sector support might be needed to deal quickly with downside risks should they materialize."
Shares on the Vienna stock market have tumbled by more than 44 per cent in the past 12 months, as investors fled companies involved in Central and Eastern Europe.
The government should soon come up with a plan to consolidate the budget once economic conditions improve, said the group of 30 industrialized countries that also includes Austria.
Austrian economic research institutes expect the national economy to shrink by between 3.4 to 4.3 per cent this year, after a growth of 1.8 per cent in 2008. They expect a slight upturn of 0.3 to 0.5 per cent for 2010.
