The Austrian economy is deemed as one of the most stable in Europe strong industry and service sector. In 2019 Austria recorded growth of 1,6 % (IMF estimation) and is expected to remain stable in the coming years.
Austria has a population of 8.8 million population of which 4.4 million people belong to labour force, of whom many are highly educated and skilled. The country has a low percentage of unemployment compared to other countries in the eurozone and the EU, I low single digits. In 2019, unemployment rate grew slightly to 5.1% but it is expected to remain stable to 5% in 2020 and 2021 (IMF estimates). By the same token, there is a labour shortage which could limit economic growth.
National debt has been reduced since 2015 to an estimated 70.7% of GDP in 2019 (IMF) and the government plans to bring down it to 67.7% of GDP in 2020 and to 65.1% in 2021, reaching the Maastricht criterion of 60% in a few years. The National Bank of Austria expected public deficit to reach 0.0% in 2019 thanks to the economic recovery in the Euro zone and the strengthening of trade relations with eastern European countries.
With average inflation rate of 1.8% since the introduction of the euro, Austria has successfully maintained price stability in line with Eurosystem’s definition (1.5% in 2019 and an estimated 1.9% for 2020 and 2021, according to IMF).
Austria is one of the 10 member states that contribute more to the EU budget than they receive (0.85% of GDP versus 0.51%, European Commission data).
Austria is characterized as a free market economy with a strong social focus on weaker members of society as well on as its commitment to economic and social partnership, which traditionally plays a strong and reconciliatory role in wage and price policies.
Austrian industry covers every branch of manufacturing, from basic goods to the labor-intensive production of highly processed products. The most important industries are food and luxury commodities, mechanical engineering and steel construction, chemicals, and vehicle manufacturing. The construction of plants and systems (encompassing the planning, delivery, and assembly of turn-key production facilities, including the required know-how and operational expertise) is making up an increasingly important share.
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 industrial sector is comprised of SMEs and is strongly connected to the Central European markets. It accounts for 25.4% of the GDP and employs 24.4% of the active population.
Apart from strong network of export-focused SMEs, the country relays on excellent academic standards and significant spending for research and development which contribute to innovation and business diversification in green and digital economy.
The agricultural sector employs 3.8% of the active population and represents 1.1% of GDP (World Bank data). However, combined with the food and drink industry, it represents about 12% of the GDP. There is strong trend in organic farming with overall share of 22% which gives Austria a leading position among the EU Member States. Austria benefits from significant subsidies from the European Union provided by the Common Agricultural Policy. Consequently, agricultural exports are continuously increasing.
Austria is rich in resources among which are iron ore, non-ferrous metals, important minerals and earths. Austria has its own resources of petroleum and natural gas. The generation of hydroelectric power is constantly being expanded, which makes Austria the leader in the field of hydroelectric power in the European Union.
The renewable energies sector, especially hydroelectric power, is booming and its performance has exceeded those of the tourism and construction sectors. By 2020, Austrian energy companies are expected to invest almost EUR 10 billion into the distribution, efficiency and upgrade of the energy sector.
Austria is world-famous for its arts and crafts, most notably fine hand-crafted items, costumized jewellery, ceramics, and glassware.
The services sector dominates the economy, contributing 62.7% of the GDP and employing 71.6% of the country’s active population. Every sixth job is provided by tourism, which has a major impact in the country’s economy. According to the last available information of Statistical Office, Austria registered 46.1 million arrivals in the year 2019 (with more than 31.8 million international tourists), a new record with a growth of 3%. Most of the visitors came from Germany (37%), Netherlands (7%), Switzerland (3.6%), and United Kingdom (2.6%).