ETF Trends
ETF Trends

With all the negative publicity coming out of Europe these days, the performance of the iShares MSCI Austria (NYSEArca: EWO) exchange traded fund (ETF) is pretty refreshing, especially given that it’s a eurozone economy.

EWO is up 26.1% in the last six months, and bullish forecasts seem to indicate that more gains could be in the offing:

  • The economy is growing. The European Commission (EC) projects that the Austrian economy will grow by 1.7% year-over-year in 2011, up from its previous 1.6% forecast, and estimates that the economy will expand 2.1% year-over-year in 2012, according to Austrian Independent.
  • The deficit is shrinking. The EC stated that the country’s budget deficit will be around 3.6% of GDP in 2011 and drop to 3.3% in 2012. Austria’s debt is around 70% of GDP –  E.U. guidelines dictate that debt needs to be below 60% of GDP. To that end, the government has already implemented increased taxes and reduced social services to reduce its debt.
  • Export growth will jump 10.4% this year but slow to 7.3% in 2011 and 6.9% in 2012, says the bank. Inflation may also accelerate from 1.7% for 2010 to 2.2% in 2011. Unemployment will likely sit at 4.5% this year and slowly drop to 4.3% in 2012.

Contrary to popular belief, Austria’s major markets are in Western, developed European states, report Jonathan Tirone and Boris Groendahl for Bloomberg. Germany buys 31% of Austria’s exports and Italy brings in 8%. If any of Austria’s major export partners run into trouble, it could have a negative effect on EWO, so watch this risk in the coming year.

For more information on Austria, visit our Austria category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.