VIENNA, May 15 (Reuters) - Austria's export-fuelled economy shrank in the first quarter by 2.8 percent, marking the worst recession in the post-war era, research institute WIFO said on Friday.
WIFO said in its flash GDP estimate the year-on-year fall was 3.6 percent.
"The severity of this development can be clearly seen in comparison with other recessions: in 1993 and 2001 GDP was only ever as much as 0.6 percent below the previous year's figure," WIFO said in a statement.
WIFO also revised down its fourth-quarter GDP figure to -0.4 from -0.2, which had been the first drop since 2001.
The flash estimate is for real GDP, seasonally adjusted and adjusted for the number of working days.
"The decisive factor in the first quarter collapse was a further decline in Austrian exports of goods and services, which fell 4.4 percent, worse than in the -2.3 percent of 2008's fourth quarter," WIFO said.
"The severity of this development can be appreciated when compared with past recessions -- in 1993 and 2001, GDP was at most 0.6 percent under the previous year's level."
WIFO said, however, that the overall decline was likely to ease in the second quarter.
"Confidence indicators and some special factors point to a slowing of the downward trend in the second quarter. Corporate expectations for future business have improved slightly worldwide recently but this trend has to be confirmed in coming surveys."
WIFO said the Austrian economy had reacted to the swathe of negative trends with a sizeable reduction of investment demand.
Austria's two main economic researchers WIFO and IHS slashed their outlook for Austria's growth in March, predicting the Alpine economy will contract by 2.2 to 2.7 percent this year. [ID:nLP441527]
But economists including Bank Austria's Stefan Bruckbauer think those forecasts are still too optimistic, forecasting a 3 percent decline as the German economic downturn turns out worse than still expected a few months ago.
WIFO and IHS will update their forecasts at the end of June.
Austria rode an export-driven mini-boom in 2006 and 2007, helped by a buoyant German economy -- which devours a third of Austria's exports -- and by rising trade with emerging Europe.
But in January to February, the most recent available data, Austrian exports declined by a quarter as main trading partners Germany and Italy as well as the neighbouring countries to the east bought less Austrian merchandise.
The main factor weighing down trade was cars and car parts, the biggest product category for both exports and imports in the past, which is highly geared towards German carmakers. The value of exported cars and car parts halved in January and February.
Big car parts makers in Austria include Magna International
The Austrian economy grew 3.1 percent in 2007 and 3.4 percent in 2006 -- significantly above the euro zone average. Austria accounts for 3 percent of the euro zone's total GDP. (Reporting by Boris Groendahl and Mark Heinrich)