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Economic and political overview

Economic Overview

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. Nevertheless, the country experienced the second consecutive year of recession in 2024, with GDP contracting by an estimated 0.6% following a negative growth of 0.8% one year earlier (IMF). Over the year, Private consumption growth stagnated despite rising real wages, as high inflation eroded consumer confidence, prompting a sharp increase in the saving rate. Elevated interest rates and energy costs dampened investment, particularly in construction and industry. Residential construction declined by 18% between 2023 and 2024. 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 is projected to rise to 3.7% of GDP due to higher pension and social benefit expenditures, before decreasing to 3.5% in 2026. Tax revenue growth is expected to moderate as inflation eases, with Austria’s expansionary fiscal stance in 2024 shifting to a broadly neutral position over the forecast period. Amid a combination of weaker nominal GDP growth and higher primary deficits, the debt-to-GDP ratio – estimated at 79.6% last year – is expected to follow an upward trajectory over the forecast horizon, rising to 83.3% by the end of 2026 (Fitch Ratings). 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 2025 and 2026, wage growth and services inflation are expected to decline, with headline inflation projected at 2.9% in 2024, 2.1% in 2025, and 1.7% in 2026 (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 as the economy recovers (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 wages rose by 7.5% in 2024 and are forecast to grow by 3.8% in 2025, 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 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 517.66535.80559.22584.46605.49
GDP (Constant Prices, Annual % Change) -0.8-0.61.11.71.6
GDP per Capita (USD) 56,85658,66961,08063,67865,804
General Government Balance (in % of GDP) -2.5-2.5-2.5-2.6-2.7
General Government Gross Debt (in % of GDP) 77.578.779.679.779.8
Inflation Rate (%) 7.73.02.52.32.1
Unemployment Rate (% of the Labour Force) 5.15.65.65.35.0
Current Account (billions USD) 13.7813.9813.6513.4013.11
Current Account (in % of GDP) 2.72.62.42.32.2

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Out of its 9.13 million population, Austria has a labour force of about 4.7 million people, of whom many are highly educated and skilled. The agricultural sector employs 3% of the active population and represents 1.3% of GDP (World Bank, latest data available). Crops contribute approximately 50% of agricultural output, with cereals making up nearly half of that share. Animal production accounts for just over 40%, primarily driven by milk production, which represents 23% of total agricultural output. Of the total area, 32% is agricultural land while forests cover 44%. About half of the utilised agricultural area is arable land and the other half is mostly permanent grassland. Cattle farming and viticulture are the country's main agricultural activities. There are more than 110,000 farms in Austria, while the average farm manages about 20 hectares of land (EU Commission). Organic farming is very popular in Austria: according to the latest available data (IFOAM), around one-fourth of all its farms are organic and cover over a quarter of the total agricultural area, the highest rate in the EU. The regions of Lower Austria, Styria, and Upper Austria have the highest agricultural and forestry holdings (Statistics Austria). According to preliminary estimates from Statistics Austria, the output of the agricultural industry at current basic prices in 2024 hit EUR 9.9 billion (with a total gross value added of 4.4 billion).

The industrial sector, which is comprised of SMEs connected to the Central European markets, represents 25.2% of the GDP and employs one-fourth of the active population (26%). The manufacturing sector alone represents 16% of GDP (World Bank). 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, while the mechanical engineering sector grew at a pace higher than the euro-area average in the last two decades. However, Austrian production has recently faced an economic downturn: according to the national statistics office, domestic industrial output recorded its 18th consecutive decline in November 2024.

The services sector dominates the economy, contributing 63.3% 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 latest available information from Statistics Austria, tourism accounts for 3.8% of the country’s GDP, with an added value (direct and indirect) of more than EUR 16.9 billion. However, these figures are still lower than the pre-COVID level (5.5% of GDP and EUR 22 billion, respectively). 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) 3.1 25.7 71.2
Value Added (in % of GDP) 1.3 25.2 63.3
Value Added (Annual % Change) -2.7 -2.0 -0.8

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 USD 0.940.890.850.890.88

Source: World Bank - Latest available data.

 

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Foreign Trade

The Austrian economy is heavily dependent on foreign trade, which accounts for 117% of GDP (World Bank, latest data available). According to data from Statistics Austria, machinery and vehicles led Austrian exports in 2023, accounting for 37.5% of total outbound trade, with an 8.2% increase to EUR 75.22 billion. Other major export categories included manufactured goods (EUR 39.24 bn, −8.3%), chemical products (EUR 34.55 bn, +18.8%), and other manufactured goods (EUR 19.85 bn, −2.3%), which collectively made up 84.2% of exports. On the import side, machinery and vehicles held a 34.5% share, rising by 5.6% to EUR 69.55 bn. The largest decline was in fuels and energy, which fell by 32.7% to EUR 18.25 bn.

Germany is by far Austria’s privileged partner for both imports and exports. In 2023, Austrian exports to Germany represented 29.2% of the total, while imports accounted for 31.7%. The U.S. (7.4%), Italy (6.2%), and Switzerland (5%) were among the main export destinations, whereas for imports China was the second main origin (7.5%), followed by Italy (6.4%) and Switzerland (5.1% - Statistics Austria, latest data available). The manufacturing industry is well integrated into Germany’s value chain. Austria remains therefore dependent on the economic conjuncture in Germany and in other central and eastern European countries. Overall, the EU accounted for 68.4% of exports and 64.6% of imports in 2023.

According to Statistics Austria, the total value of goods imports in 2023 was EUR 201.64 bn, down 6.3% from the previous year. Goods exports rose by 3% to EUR 200.55 bn. The trade deficit in goods narrowed to EUR 1.09 bn, compared to EUR 20.59 bn in 2022. Concerning services, the country is a net exporter: in 2023, exports of services amounted to USD 90.2 billion while imports stood at USD 80.6 billion (WTO). With the exception of 2022,  Austria’s external trade balance has invariably been in surplus since 1999: in 2023, the external balance of goods and services stood at 2.1% of GDP (World Bank). From January to September 2024, preliminary data from Statistics Austria show that goods imports totalled EUR 140.31 bn, while exports reached EUR 143.79 bn. Compared to the same period in the previous year, imports fell by 9.5% and exports by 4.1%. The trade balance showed a surplus of EUR 3.48 bn, a significant improvement from the EUR 5.08 bn deficit recorded during the same period the previous year.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 184,758172,449219,520233,519224,543
Exports of Goods (million USD) 178,670169,418202,806211,929223,549
Imports of Services (million USD) 65,83255,68566,79574,32380,670
Exports of Services (million USD) 76,63964,99070,38983,18390,217

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 108.299.9111.0124.4116.8
Trade Balance (million USD) 4,9345,120114-9,2724,319
Trade Balance (Including Service) (million USD) 15,50214,0783,788-2,51910,222
Imports of Goods and Services (Annual % Change) 2.4-9.614.17.1-4.6
Exports of Goods and Services (Annual % Change) 4.0-10.59.510.0-0.4
Imports of Goods and Services (in % of GDP) 52.348.355.162.457.3
Exports of Goods and Services (in % of GDP) 55.951.756.062.059.5

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) -1.03.43.22.72.1
Volume of imports of goods and services (Annual % change) -0.63.63.02.62.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Austria is a member of the following international economic organisations: European Union, ICC, Schengen Agreement, IMF, G-9, WTO, among others. For the full list of economic and other international organisations in which participates Austria click here. International organisation membership of Austria is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Austria can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
Germany 29.0%
United States 7.2%
Italy 6.1%
Switzerland 5.2%
Belgium 3.8%
See More Countries 48.7%
Main Suppliers
(% of Imports)		 2023
Germany 31.4%
China 7.5%
Italy 6.4%
Switzerland 5.7%
Czech Republic 4.1%
See More Countries 44.9%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Alexander VAN DER BELLEN (since 26 January 2017)
Chancellor: Alexander SCHALLENBERG (since 10 January 2025) serving as interim Chancellor
Next Election Dates
Presidential: April 2028
National Council: 2029
Current Political Context
Legislative elections were held in Austria on 29 September 2024 to elect the 28th National Council. The far-right Freedom Party of Austria (FPÖ) emerged as the leading party, securing 28.8% of the vote and achieving its best-ever result. This marked the first instance since World War II that a far-right party won the most seats in a legislative election in Austria and happened after FPÖ obtained 25.4% of the votes in the European Parliament election held in June, winning its first ever nationwide polls. The ruling Austrian People's Party (ÖVP) lost 20 seats, while its coalition partner, the Greens, saw a loss of 10 seats. The centre-left Social Democratic Party (SPÖ) garnered 21.1%, its worst result both in percentage and in seat position (3rd), although it gained one seat compared to the previous election. NEOS saw a modest improvement from 2019, increasing from 15 to 18 seats. No other party surpassed the 4% threshold to secure any seats.
Alexander Schallenberg was appointed caretaker chancellor on January 10th 2025, succeeding outgoing Karl Nehammer, who resigned after the first post-election coalition talks collapsed. Austria's conservative ÖVP-led government is due to remain in power as a caretaker administration until a new coalition is formed.
In terms of foreign policy, Austria has maintained a neutral stance regarding the Russia-Ukraine conflict. The FPÖ has expressed opposition to EU sanctions against Russia and has called for an end to the European Sky Shield Initiative, a joint missile defence project.
Main Political Parties
Austria has a multi-party system. The main parties represented in the parliament include:

- Freedom Party (FPÖ): right-wing, nationalist and anti-immigration
- Austrian People’s Party (ÖVP): centre-right, Christian democratic and conservative
- Social Democratic Party (SPÖ): centre-left
- The New Austria and Liberal Forum (NEOS): centre, liberal
- The Greens (GRÜNE): centre-left

Executive Power
The President is the Chief of State, while the Federal Chancellor is the Head of Government. The Federal Chancellor enjoys executive powers. The President is elected by direct popular vote for a six-year term and the Chancellor is traditionally chosen by the President from the majority party in the National Council. The Council of Ministers is chosen by the President on the advice of the Chancellor.
Legislative Power
The legislature in Austria is bicameral. The parliament consists of two chambers: The National Council (the lower house) whose 183 members are elected by direct popular vote to serve four-year terms, and the Federal Council (the upper house) whose 60 members are elected by provincial parliaments to serve five- or six-year terms. The President can dissolve the National Council on the recommendation of the Chancellor. The Federal Council only reviews legislation passed by the National Council and can delay but not veto its enactment. Most authority, including that of the police, rests with the federal Government but the states have considerable responsibility for welfare matters and local administration.
 

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