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Eco Perspectives

Austria: a slump on the horizon?
12/15/2022 •

After dynamic business activity during the first six months of the year, Austrian growth slowed very dramatically during Q3 2022, due to the economic downturn both nationally and internationally. GDP is not expected to rebound over the final months of the year and is even poised to stagnate in 2023. However, the downturn in business activity has not stopped the government from announcing an ambitious reduction in the public deficit, which would fall below 3% from next year. This would result in a sharp decrease in the public-debt-to-GDP ratio. These commitments appear to be credible, as the incumbent Green President, Alexander Van der Bellen, was easily re-elected on 9 October, offering political stability to the country following the debacle of the 2016 election.

Eco Perspectives

Crisis atmosphere
12/16/2021 •

Once Covid-related restrictions are lifted, the economy is projected to rebound strongly in 2022, driven initially by household consumption. Next year, the fiscal stance is likely to tighten because of the gradual withdrawal of the special support measures. A major political risk is the possible falling apart of coalition between the conservative ÖVP and the Greens.

Eco Perspectives

Corporate sector severely weakened by Covid-19 crisis
12/16/2020 •

The government decreed a second lockdown in November due to the rapid rise in Covid-19 infections. Business indicators point to a fall in activity. Thanks to the short-time work scheme, unemployment has only risen moderately. Moreover, inflation has remained at a relative high level compared to other eurozone countries. In 2021, fiscal policy remains very accommodative and the deficit might only shrink to 6.3% of GDP. The economy is projected to rebound by 3.5% in 2021 compared with a slump in 2020 (-7.5%). A major downside risk is the increased indebtedness of the non-financial corporate sector. 

Eco Perspectives

Vote of confidence in conservative policies
10/09/2019 •

After its electoral success in late September, the conservative party (ÖVP) is expected to form a new government. To obtain a majority, the party could turn again to the FPÖ (far right). In that case, policies should remain largely unchanged and focus on fiscal consolidation and the reduction of the tax burden. The next government will face a less favourable economic environment. GDP growth could decelerate to around 1.2% in 2020. Nevertheless, public finances have improved considerably, giving the government sufficient leeway to fight a recession, if necessary.

Eco Flash

Policy unlikely to change after election
09/04/2019 •

A general election will be held on 29 September, as the coalition between ÖVP and FPÖ fell apart in May. The ÖVP is likely to increase its seats in parliament, but probably has to turn to the FPÖ again to obtain a majority. The policy is unlikely to change and remains focused on budget consolidation and the reduction of the tax burden. The next government will be confronted with a less supportive economic environment. GDP growth is expected to slow to around 1.2% in 2020.

Austria is a federal republic consisting of nine states (Bundesländer). The states have some legislative authority distinct from the federal government, e.g. in matters of culture, social welfare, youth and nature protection, hunting, building, and zoning ordinances.

Austria is a highly developed country. In 2019 it was the fifth richest country within the European Union, having a GDP (PPP) per capita of approximately 44,920 euros, with Luxembourg, Ireland, Netherlanads and Sweden leading the list. The manufacturing sector is relatively large, accounting for almost 20% of value added. The most important industries are machinery and equipment, motor vehicles and parts, chemicals, iron and steel, foodstuffs. In addition, tourism is an essential pillar of the Austrian economy. In 2018, it contributed more than 15% to GDP.

Germany has historically been the main trading partner of Austria, accounting for about 30% of the country’s exports in 2016 and even about 40% of its imports. The central and eastern European countries are playing an increasingly important role, accounting for 16% of Austrian’s exports. Almost 70% of Austria's imports come from other European Union member states.