(Adds Nowotny comment, detail)
VIENNA, June 6 (Reuters) - Austria’s central bank has cut its economic growth forecasts for the country for this year and next, partly because a decision to take in fewer asylum seekers means the stimulus from public spending on them will be smaller.
Announcing its semi-annual economic forecasts, the Austrian National Bank on Monday reduced its real gross domestic product (GDP) growth forecasts for 2016 and 2017 by 0.3 percentage points each, to 1.6 percent and 1.5 percent.
In January Austria announced a clampdown on immigration that included capping asylum claims for 2016 at less than half last year’s total of roughly 90,000. That would reduce the effect on growth from public spending by roughly 0.1 percentage points a year, the central bank said.
“The area of positive effects through refugees is slightly smaller because the number of refugees or asylum seekers here is assumed to be lower,” Governor Ewald Nowotny told a news conference.
Spending on refugees and a fiscal overhaul that largely cut Austrians’ taxes were the two main exceptional factors driving growth, but the forecasts had only now factored in measures to finance those tax breaks, denting the growth estimates further.
Exports, normally a key driver of the economy, will grow faster than imports only as of next year, the central bank said.
“As the growth of domestic exports will remain lower than the growth of Austrian export markets, there will be small reductions in market share,” it said in a statement.
It revised down its 2016 inflation forecast to 1.0 percent, based on the harmonised index of consumer prices. It had forecast in December inflation would hit 1.3 percent this year.
It forecast inflation of 1.7 percent in 2017, unchanged from its previous forecast, and 1.9 percent in 2018, in line with the European Central Bank’s goal of inflation just under 2 percent.
One factor keeping Austrian inflation well above the euro zone average was price increases in the tourism sector, Nowotny said. The country draws visitors from around the world to its Alpine regions and Vienna’s tourist sights.
“One can say slightly cynically that Austria is one of the few safe travel destinations left to visit,” Nowotny said in an apparent reference to fears of Islamist militancy that have hurt tourism in countries like France, Egypt and Tunisia.
“And that has an effect through higher demand,” he added. (Reporting by Francois Murphy and Alexandra Schwarz-Goerlich; Editing by Michael Shields)
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