Austria flag Austria: Economic and Political Overview

The economic context of Austria

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Austrian economy is deemed one of the most stable in Europe. The country relies on a very strong network of export-focused SMEs, excellent academic standards and significant spending for research and development. Public and private consumption are likely to buttress the domestic economy with households benefiting from a tight labour market and higher wages. Following the setback caused by the COVID-19 pandemic, Austria’s economy registered a strong rebound in 2021, with a GDP growth estimated at 3.9% by the IMF. Private consumption and considerable increases in investment were the main drivers, together with the partial recovery of the tourism sector. According to the IMF's forecasts, the economic expansion should accelerate to 4.5% this year before setting around 2.1% in 2023 (4.9% and 1.9%, respectively, as per the EU Commission projections).

Due to the economic crisis triggered by the COVID-19 pandemic, Austria's public debt has increased, jumping to 84.2% of GDP in 2021 from a pre-pandemic level of 70.5%. Robust nominal growth and further reduction in the headline budget deficit should pave the way for a progressive decrease of the debt, forecasted at 81.1% in 2022 and 79.8% the following year (IMF). The fiscal measures taken to mitigate the socioeconomic consequences of the pandemic and the decline in government revenues prompted a budget deficit of 4.8% in 2021. Nevertheless, the headline deficit is forecast to fall well below the 3% threshold over the forecast horizon (2.7% this year and 1.6% in 2023 – IMF). Rising energy prices drove headline inflation to 2.5% in 2021. The index should gradually decrease to 2.4% in 2022 and 2% in 2023.

Austria has a low percentage of unemployment compared to other countries in the Eurozone and the EU, as well as global comparison. Despite the recession triggered by the COVID-19 pandemic, the unemployment rate increased only marginally: at 6.4% in 2021, it is expected to follow a downward path this year (6%) and the next (5.5% - IMF). In the long term, labour shortages could limit economic growth, and persistent global trade tensions represent a further downside risk. Overall, Austrians enjoy one of the highest GDP per capita (PPP) in Europe, estimated by the IMF at USD 59,410 in 2021.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 445.13e432.52481.21520.34545.76
GDP (Constant Prices, Annual % Change) 1.4e-6.23.94.52.1
GDP per Capita (USD) 50,24748,59353,79357,87960,404
General Government Balance (in % of GDP) -1.2-6.2-4.8-2.7-1.6
General Government Gross Debt (in % of GDP) 70.583.2e84.281.179.8
Inflation Rate (%) 1.51.4e2.52.42.0
Unemployment Rate (% of the Labour Force) 4.85.4e6.46.05.5
Current Account (billions USD) 12.6510.817.7410.419.73
Current Account (in % of GDP) 2.82.51.62.01.8

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Out of its 8.91 million population, Austria has a labour force of about 4.5 million people, of whom many are highly educated and skilled. The agricultural sector employs 4% of the active population and represents 1.2% of GDP (World Bank, latest data available). Cattle farming and viticulture are the country's main agricultural activities. Organic farming is incredibly popular in Austria. According to the latest available data (IFOAM), 23% of all its farms are organic and cover over a quarter of the total agricultural area, the highest rate in the EU and the second in Europe after Liechtenstein. Austria benefits from significant subsidies from the European Union provided by the Common Agricultural Policy. Consequently, agricultural exports are continuously increasing.

The industrial sector, which is comprised of SMEs connected to the Central European markets, represents 25.7% of the GDP and employs 25% of the active population. The main industrial sectors are the metal industry, electrochemistry and engineering. Over the past fifteen years, Austria has successfully implemented policies for the economic specialization of each region (Lander): Upper Austria (iron, steel, chemical and mechanical engineering), Salzburg (electrics, wood and paper), Vorarlberg (textile, clothing), Carinthia (wood, pulp and paper industry), Styria (automobiles, manufacturing) and Vienna (financial services). The renewable energies sector, especially hydroelectric power, is booming and its performance has exceeded those of the tourism and construction sectors, while the mechanical engineering sector grew by 140% in the last 20 years, with a pace ten times higher than the euro-area average.

The services sector dominates the economy, contributing 62.8% of GDP and employing 71% 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 last available information from the Austrian Statistical Office, tourism accounts for 7.9% of the country’s GDP, with an added value (direct and indirect) of more than EUR 29.1 billion. Nevertheless, in 2021 the sector was impacted by further lockdown measures taken by the government to contain a new wave of the COVID-19 pandemic.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 3.7 25.4 71.0
Value Added (in % of GDP) 1.2 25.7 62.8
Value Added (Annual % Change) 0.2 -5.6 -6.1

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
73,9/100
World Rank:
25
Regional Rank:
13

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten 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.

Score:
7.65/10
World Rank:
18/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Latest Update: June 2022

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