Austria: Economic and Political Overview
. Elevated interest rates and energy costs dampened investment, particularly in construction and industry. Construction investment has remained negative, with housing investment contracting for a fifth consecutive year. Weak industrial growth and low corporate investment from key trading partners disproportionately impacted Austria’s industry, which specializes in intermediate goods and machinery for export. As per the IMF, growth is set to resume in 2025 (+1.1%) and 2026 (+1.7%). Private consumption is expected to recover as uncertainties subside, while investments are forecast to rebound, driven by rising demand from key trading partners, lower energy costs, and improved financing conditions.
The general government deficit rose from 2.6% of GDP in 2023 to 3.6% in 2024 (EU Commission), driven primarily by the inflation-linked indexation of public salaries, pensions, and social benefits, along with increased spending on childcare, healthcare, housing, and climate initiatives under the national fiscal framework. Furthermore, measures to mitigate high energy prices, such as the electricity price brake, were extended until the end of 2024. In 2025, the deficit reached 4.2% of GDP, and it is projected to ease marginally to 4.1% in both 2026 and 2027. Tax revenue growth is expected to moderate as inflation eases, with Austria’s earlier expansionary fiscal stance shifting to a contractionary one worth 0.4% of GDP over the forecast period. Amid a combination of weaker nominal GDP growth and higher primary deficits, the debt-to-GDP ratio – estimated at 81.5% last year – is expected to follow an upward trajectory over the forecast horizon, rising to 83.4% by the end of 2026 and 84.9% in 2027 (EU Commission). Headline inflation dropped from 7.7% in 2023 to around 3% in 2024, driven by lower wholesale energy prices and easing price pressures on industrial goods and food. Services inflation remained persistent due to high wage growth. In 2026 and 2027, wage growth and services inflation are expected to decline, with headline inflation at 3.6% in 2025 and projected at 3.0% in 2026 and 2.5% in 2027 (EU Commission).
Austria has a low percentage of unemployment compared to other countries in the Eurozone and the EU, as well as global comparison. The prolonged recession moderately impacted the labour market, with the unemployment rate rising from 5.1% in 2023 to 5.6% in 2024. It is expected to remain stable in 2025 before falling in 2026 (IMF). Retirement trends helped limit unemployment growth, though migration and the gradual alignment of women’s retirement age with men's maintained labour supply. Nominal compensation per employee rose by 3.6% in 2025 and is forecast to grow by 3.0% in 2026, supporting real wage growth. Overall, Austrians enjoy one of the highest GDP per capita (PPP) in Europe, estimated by the IMF at USD 61,080 in 2025.
| Main Indicators | 2025 | 2026 (E) | 2027 (E) | 2028 (E) | 2029 (E) |
| GDP (billions USD) | 579.93 | 623.72 | 644.69 | 664.45 | 686.01 |
| GDP (Constant Prices, Annual % Change) | 0.6 | 0.7 | 1.0 | 1.3 | 1.1 |
| GDP per Capita (USD) | 63,161 | 67,761 | 69,865 | 71,805 | 73,929 |
| General Government Balance (in % of GDP) | -4.5 | -4.2 | -3.8 | -3.8 | -3.7 |
| General Government Gross Debt (in % of GDP) | 80.5 | 82.1 | 82.7 | 83.4 | 84.2 |
| Inflation Rate (%) | 3.6 | 2.5 | 2.6 | 2.1 | 2.1 |
| Unemployment Rate (% of the Labour Force) | 5.7 | 5.7 | 5.6 | 5.4 | 5.2 |
| Current Account (billions USD) | 6.00 | 2.73 | 4.74 | 10.70 | 14.71 |
| Current Account (in % of GDP) | 1.0 | 0.4 | 0.7 | 1.6 | 2.1 |
Source: IMF – World Economic Outlook Database, Latest data available
office, domestic industrial output was unchanged year on year in June 2026, after modest increases of 0.6% in April and 0.7% in May.
The services sector dominates the economy, contributing 64.1% of GDP and employing 73% of the country's active population. Every sixth job is provided by tourism, which has a major impact on the country’s economy. According to the latest available information from Statistics Austria, tourism accounts for 4.4% of the country’s GDP as a direct contribution, and for 4.3% of total employment, on tourism expenditure of EUR 39.2 billion in 2024. Concerning the banking sector, the Austrian network consists of 520 banks with around 3,420 branches, with a high banking density and a banking sector size in relation to GDP that is above the EU average (European Banking Federation).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 2.8 | 24.6 | 72.6 |
| Value Added (in % of GDP) | 1.3 | 24.0 | 64.1 |
| Value Added (Annual % Change) | 1.6 | -1.1 | 1.0 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The business rankings model measures the quality or attractiveness of the business environment in a series of countries. It examines separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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