Austria: Macroeconomic Country Outlook
- GlobalData forecasts Austria’s real GDP to grow by 3.7% in 2022
- Austria was ranked 18th out of 152 nations in the GlobalData Country Risk Index (GCRI) Q2 2022
- According to GlobalData, the country’s services sector grew by 6.1% in 2021
Austria has an extremely well-diversified economy with no sector dominating the sectoral structure. In addition, the country recorded low unemployment rate in the EU in 2021, which partly reflects the success of its subsidized short-term working programs and other measures to make the labor market flexible in aftermath of the global financial crisis. According to the IMF, the country had a current account surplus of $8.2 billion in 2020, which indicates a robust trade balance as a result of the growing Austrian export industry. According to the OECD, household debt as a percentage of net disposable income was 93% in 2020, which is lower than other peer OECD nations such as France, the Netherlands, and Denmark.
Key findings
- Austria and Israel to increase cooperation: In July 2022, Israel and Austria signed an agreement with an aim to establish a comprehensive strategic partnership to expand security cooperation. The agreement was signed by Israeli Prime Minister Yair Lapid and Austrian Chancellor Karl Nehammer. The agreement aims to establish cooperation in fields, including cyber and counter-terrorism, tourism, technology, trade, innovation, investment promotion, the struggle against climate change, green tech and digitalization, and health in the light of COVID-19 pandemic.
- Austria announces Broadband Strategy 2030: Austria’s Broadband Strategy 2030 was adopted in 2019. The strategy aims to provide nationwide gigabit-capable broadband connectivity, including nationwide 5G coverage, by 2030. In April 2021, the Government of Austria planned to allocate EUR1.4 billion ($1.7 billion) by 2026, to speed up fixed broadband rollouts. Funds are expected to come from the resilience fund of the EU, the current budget, and raised revenues from the frequency awards in 2019 and 2020 ($433 million). Along with supporting Austria’s Broadband Strategy 2030, the budget also aims to provide all citizens with access to high-speed broadband and balance the opportunities between rural and metropolitan areas.
- Austria was ranked 27th out of 190 countries in the World Bank’s doing business ranking in 2020: According to the World Bank, Doing Business report (2020), Austria’s score (78.7 out of 100) is ahead of France (76.8), Belgium (75) and the OECD high income average (78.4). It takes 21 days to start a business in Austria as compared to the OECD high income average of 9.2 days. The border compliance cost and time to export in Austria is zero for both parameters as compared to the average of $136.8 and 12.7 hours, respectively, in OECD high income nations.
- Austria introduces RTI Strategy 2030: In 2021, Austria’s Council of Ministers adopted the RTI 2030 strategy (Strategy for Research, Technology, and Innovation of the Austrian Federal Government) with the aim to encourage more investment in research and innovation. The strategy also aims to bring Austria closer to Europe’s innovation leaders. The main objectives of the strategy include, i) Becoming an innovation leader and strengthening Austria as an RTI location, ii) Making Austria one of the top five countries in international innovation rankings, by increasing the R&D expenditure relative to GDP and ii) focusing on knowledge, talent, and skills.
- Step towards renewable energy in the country: According to Eurostat data, 36.5% of Austria’s power came from renewable sources in 2020, which is much higher as compared to EU-27 average of 22.1%. Biomass and renewable waste constitute the largest source of Austria's renewable energy, followed by hydropower; other sources like biogas, solar power, and wind power supply the remainder. In March 2021, the government presented its final version of the Renewable Energy Expansion Act (REEA), which aims to reshape the Austrian legal framework on renewable energy generation, distribution, and consumption. The draft assigns special focus on the participation of wind farms, hydro-electric power plants, and large-scale photovoltaic projects.
- Austrian government announces budget for 2022: In October 2021, the Austrian finance minister presented the draft budget for 2022 to the Austrian National Council. According to the budget 2022, the government forecast a deficit amounting to EUR12.6 billion ($15.1 billion). The revenue and expenditure are forecast to amount to EUR86.4 billion ($103.3 billion) and EUR99.1 billion ($118.5 billion), respectively. In addition, as per the budget 2022, the general government gross debt is forecast at 79.1% of GDP in 2022, which is expected to gradually decrease to 72.5% of GDP by 2025. In addition, the government aims to spend EUR3.7 billion ($4.4 billion) towards healthcare services, EUR3.2 billion ($3.8 billion) to reduce spread of the COVID-19 pandemic, and EUR10 million ($12.0 million) towards protecting women against domestic violence.
Key fundamentals
Sectoral outlook
- Revival for travel and tourism industry: According to the World Economic Forum, World Travel and Tourism Index (2021), Austria ranked 11th out of 117 nations. According to the World Travel and Tourism Council, tourism contributed 10.3% towards GDP in 2019. However, this contribution decreased to 5.3% in 2020 and 6.1% in 2021, due to the outbreak of COVID-19 pandemic, which led to imposition of domestic lockdowns and international travel ban. In 2020 and 2021, the number of international tourist arrivals plunged 78.7% and 95.9%, respectively. However, in May 2022, Austria opened its borders to international tourists. According to Statistics Austria, in the first half of 2022, a total of 62.5 million overnight stays were recorded in Austria, an increase of 343.3%, compared to the same period of 2021, however, a decline of 18.1% was recorded during the same period of 2019. According to GlobalData, international arrivals in the country is forecast to reach 24 million in 2022 and 28.3 million in 2023.
- Robust artificial intelligence policy to boost technology sector of the country: In May 2022, the Government of Austria revealed the Austria-Artificial Intelligence Mission 2030 with an aim to realize opportunities related to Artificial Intelligence for Austria and minimize potential risks. The government aims to adopt a holistic approach which would be based on digital competence assessment tools, tailor-made learning models and recognition of digital competence certifications. The main objective of the Artificial Intelligence Mission 2030 includes, i) Designing interactive digital tools for self-assessment of existing knowledge and skills in the field of Artificial Intelligence, ii) Strengthening basic skills in STEM (Science, Technology, Engineering, and Mathematics) for the use and development of Artificial intelligence in general education and vocational higher schools.
- Support for renewable energy in Austria: In December 2021, the European Commission approved the Austrian aid scheme to support electricity production from renewable sources, which would help Austria reach its target of 100% renewable by 2030. In April 2022, Austria’s Ministry of Climate Protection and Environment approved an investment subsidy target amounting to EUR300 million ($327.6 million) for green energy in 2022, which would add around 1TWh of electricity. Approximately EUR240 million ($270.7 million) would be towards the installation of new solar photovoltaic (PV) plants. Around EUR35.4 million ($39.9 million) would go towards subsidization of hydropower projects while wind and biomass power would get investment subsidies amounting to EUR4.0 million ($4.5 million) and EUR6.0 million ($6.8 million), respectively.
GlobalData Country Risk Index (GCRI) – Q2 2022
Austria was ranked 18th out of 152 nations in the GCRI Q2 2022. The country’s score is in the very low risk band (below 30). Austria’s overall risk score is lower than the Western European and World average. Austria has a relatively high score in terms of demographic and social structure effectiveness as compared to the West Europe average. The country's score in terms of political, macroeconomic, legal and technology and infrastructure risk was lower than the regional average.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. West Europe nations in this publication include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, the Netherlands, Norway, Portugal. Ireland, Spain, Sweden, the UK, Luxembourg, Iceland and Switzerland.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Macroeconomic Outlook Report: Austria
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