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Eco Perspectives

Austria | The economy will only recover slowly
07/02/2024 • By Lucie BARETTE

After being in recession in 2023 (-0.8% on an annual average), due to falling investment, high inflation and the decline in real wages, Austrian growth is expected to remain weak this year (+0.3% according to the European Commission). In Q1, real GDP grew by just 0.2% q/q, still dragged down by the decline in investment (-4.7% q/q, contributing -1.1 pp to growth), but nevertheless pulled up by the rebound in private consumption (+0.8% q/q, contributing +0.4 pp), itself supported by the return of real wage increases and the resilience of the labour market.

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. 

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.