Economy of Austria

By | April 29, 2022

According to cheeroutdoor, Austria is one of the most developed countries in Europe. GDP per capita in 2002 amounted to 24.7 thousand euros (in 1995 prices). This figure is constantly growing (in 1990 it was 20.1 thousand euros, in 1995 – 21.4 thousand euros), and in US dollars at current prices and at purchasing power parity in 2001 – 28.2 thousand (with an average of EU 25.5 thousand). Thus, Austria was ahead of Sweden, Great Britain, Italy, France, Germany, and was second only to Denmark, the Netherlands, Ireland and Luxembourg.

The volume of GDP in constant prices in 2002 amounted to 200.7 billion euros. GDP production per 1 employed in 2001 (labor productivity) – 58.3 thousand euros.

The Austrian economy is distinguished by a relatively low level of inflation (in 2002 – 1.8%) and unemployment (in 2000 – 3.7% of the working-age population, in 2002 – 4.3%). The consumer price index in 2002 to 1996 was 108.8, while in the EU as a whole it was 110.8.

Approximately 2.2% of GDP is produced in agriculture and forestry, 32.3% in industry, energy and construction, 65.5% in services, trade, transport and communications, banking and insurance systems.

The most important industrial sectors are engineering, food, chemical, pulp and paper, and metallurgical. In the automotive industry, the most important part is the production of engines (900 thousand units per year) and gearboxes, with the share of their exports over 90%. In the field of electronic technology, Austria has gained international recognition for its custom-made integrated circuits and chips. The production, mainly for export, of complex industrial equipment is becoming increasingly important.

The potential of hydroelectric power plants is constantly expanding, Austria is the largest producer of hydroelectric power in the EU. If in 1998 hydroelectric power plants produced 38.7 thousand GW (67.4% of all electricity produced in the country), then in 2000 – 43.5 thousand GW (70.5%). At the same time, in 2000 the country exported 15.1 GW and imported 13.8 GW.

Industrial production in 2002 increased by 32.9% compared to the level of 1995, with the largest increase observed in Carinthia (by 56.5%), while in Vienna it decreased by 3.6%. Growth in the production of investment goods over the same period was 56.5%, while consumer durables decreased by 0.5% (although in 2000 the index was 110.6). The production of clothing fell by 2 times, but production in the tobacco industry increased by more than 2 times. The production index in mechanical engineering was 173.8, in electrical engineering – 203.0, in the production of vehicles and their components – 203.9. Especially rapid growth was observed in the production of office equipment and information processing devices – the index in 2002 by 1995 was 656, and in 2001 it was even higher – 699.

Despite the fact that the mountainous terrain is not suitable for agriculture, the use of modern farming methods makes it possible for Austria to provide 3/4 of the needs of the domestic agricultural market.

41% of the country’s area is in agricultural use. Agricultural and forestry workers make up only 5% of the working population. In agriculture, there are strict regulations for the use of plant protection products and fertilizers. In Austria, 70% of enterprises using 90% of agricultural land participate in the national environmental program (on average in the EU – approx. 20%). More than 20 thousand farms produce environmentally friendly bio-products.

The length of railways is a little over 6 thousand km, of which more than half are electrified. The total length of highways is 133.4 thousand km, incl. more than 1600 km – high-speed roads. More than 4 million cars and approx. 350 thousand trucks. Inland waterways – 358 km. In passenger transportation, bus transport is the leader – 608 million people. in 2000, followed by rail – 183 million. In terms of freight traffic, road transport is more than 3 times higher than rail, but in terms of ton-kilometers, their indicators are approximately equal (in 2001, road – 17,556 million tkm, rail – 17,387 million tkm).

6 international airports: in Vienna, Salzburg, Graz, Innsbruck, Linz and Klagenfurt. The largest airline, Austrian Airlines, has 90 aircraft and carried 8 million passengers in 2000 (out of a total of 15.6 million).

The length of oil pipelines is 777 km, gas pipelines – 840 km. Approx. 60 million tons of products.

Despite being landlocked, Austria has 10 merchant ships.

Communications are well developed in the country, approx. 30 companies. There are 4 million telephone points and 6 million mobile phones. Almost half of the population – 4 million people. – uses the Internet.

Austria is a highly industrialized country, but the majority of the population works in retail, banking, healthcare, education, and tourism, the latter being one of the most profitable industries in the economy.

In 2002, the number of tourists amounted to 27.4 million, incl. 18.6 million – foreign. Gross tourism receipts in 2002 are estimated at 9.6 billion euros (less than in 2001 by almost 1.7 billion euros, although the number of tourists has increased).

In recent years, a number of important economic and political functions have been carried out to a greater or lesser extent by supranational state bodies (first of all, this applies to foreign trade and monetary policy). Nevertheless, at the national level, the Austrian government continues to carry out important tasks of economic and social policy.

A characteristic feature of the post-war development of Austria is the significant share of public sector enterprises in the industry. In 1986, the share of state-owned enterprises united in the Esterreichische Industriholding A.G. (“EIAG”), in the volume of industrial production was approx. 30%, and in the total number of people employed in industry – 20%.

In 1987, the Austrian government adopted the EIAG “rehabilitation” program, aimed at the consistent privatization of promising and profitable enterprises and the elimination of inefficient industries. By 2000, the state retained only 2 enterprises in full ownership, and in the rest it retains equity participation, and the largest in the tobacco industry (more than 40%), in the Austrian Airlines company (39.7%), in the capital of the largest concerns in the black metallurgy (35-39%).

In economic policy in the 1990s. a line was drawn towards further reduction of the public sector, privatization, reduction of the direct participation of the state in economic activity, support for private entrepreneurship, shifting the center of gravity of state regulation to improving the framework conditions for the activities of economic entities.

The coalition government of the ANP and APS, having proclaimed the slogan “govern in a new way”, has outlined a program of reforms, which, to a certain extent, can lead to a gradual erosion of the social partnership system that has guaranteed social stability in society for decades.

The government pays great attention to the tasks of financial consolidation, reorganization of the country’s budget, improvement of the financial situation of individual structures with direct or indirect participation of the state. The most important components of the government program are the implementation of the pension reform, which caused violent protests in the country, the consistent privatization of state property, the reform of the administrative and management sphere, the development of the national capital market, and the strengthening of the scientific potential of the economy.

Of particular importance is the comprehensive reform of the social security system. In Austria, social insurance is compulsory for all non-self-employed workers (except government officials). Employees and employers pay in equal shares numerous social contributions, from which the relevant social funds are formed: pension, medical, accident, unemployment insurance, contribution to compensation funds in case of bankruptcy of an enterprise, contribution to equalize the situation of families, assistance in housing construction and some others.

After 1999, the main functions of monetary regulation in connection with the formation of the Economic and Monetary Union were transferred to the European Central Bank (ECB). The National Bank of Austria is a member of the European System of Central Banks and implements policies formulated by the ECB. At the same time, the National Bank of Austria retains the functions of control over the payment turnover and the issuance of euro banknotes, and the management of its gold and foreign exchange reserves.

Credit institutions in Austria are very diverse. In terms of balance sheet value, the leading place is occupied by savings banks (38% of the total balance sheet amount at the end of 2000), and in terms of the number of institutions and branches, Raiffeisenbanks (625 main institutions out of a total of 923 and 1,741 branches out of 4,556). In addition, there are joint-stock banks (second place in terms of balance sheet), construction savings banks, land mortgage banks, Volksbanks, and special banks. If in the 1980s the number of credit institutions grew, then in the 1990s it slightly decreased.

The share of GDP redistributed by the state is very large, although it has been declining slightly in recent years. If in 1990 total government spending, including social funds, amounted to 53.1% of GDP, then in 1993 it was 57.9%, but then decreased to 52.5% in 2000 and 52.3% in 2001.

The state budget deficit is practically constant (with the exception of 2001, when there was a surplus of +0.3% of GDP). But if in the beginning 1990s it fluctuated from -3 to -5.2%, then since 1997 it did not exceed -2.4%, and in 2002 it was -0.6%, i.e. the country complies with the Maastricht criteria for this indicator. However, the public debt, which until 1992 was less than 60% of GDP, then increased to 69.2% and now fluctuates at the level of 67-68% (or 146.5 billion euros, including 132.2 billion – federal debt), exceeding the 60% limit set by the Maastricht Treaty.

Federal budget expenditures, according to preliminary data, in 2002 amounted to 61.8 billion euros, and revenues – 59.4 billion euros. Approximately 45% of income comes from taxes on income and property, 29.7% comes from turnover tax, 8% from excise taxes. The main part of the expenses is for the social sphere.

The government is implementing a tax reform in order to reduce the level of taxation of wages and other incomes of citizens and their families, while providing some tax benefits to entrepreneurs, as well as to simplify the tax system as a whole while tightening control over tax payments.

Austria has a developed system of social security and protection, which has two levels: compulsory insurance and state social assistance. While providing social stability and confidence, this system is nevertheless very expensive and requires – incl. and for demographic reasons, ever-increasing deductions. Therefore, if in 1990-2001 total gross wages increased by 51%, then net wages – by only 35% (at the same time, deductions in the form of payroll tax and social contributions doubled).

In 2001, the average nominal wage per 1 employee was 2,400 euros per month (gross), having increased by 41% compared to 1990 (net wages per 1 employee in 2001 amounted to 1,620 euros and increased compared to 1990 by 26.6 %).

A positive factor for the stability of the standard of living of the population is the low growth in prices for consumer goods and services; over the past 2 years, the price of tobacco products has increased the most (by 10.8%), and the least (by 1.1%) – for household electricity and home heating.

So far, unemployment in Austria is relatively low, but if the stagnation of the European economy drags on, it could rise significantly. The number of registered unemployed averaged 232.4 thousand people. The number of vacancies has decreased markedly. Among the unemployed, the proportion of people over 50 in 2002 was 48.4%. The number of job seekers for more than 1 year is only 5.5%, the average duration of registration at the labor exchange is 137 days.

An important role is played by external economic relations; Austria trades with 150 countries of the world.

Export of goods in 2002 was 77.3 billion euros (4.1% more than in 2001; in 2000 the growth was 15.6%, in 2001 – 6.5%). Cars, paper and cardboard, automobiles, ferrous metals are exported. Almost half of exports are consumer goods.

Import of goods in 2002 – 76.9 billion euros (2.2% less than in 2001; in 2000 the growth was 14.7%, in 2001 – 5%). Imports are predominantly finished products, with consumer goods accounting for half of the imports.

In 2002, there was a slight positive trade balance, while in previous years it was negative.

The vast majority of Austrian trade is with EU countries (60.2% of exports and 65.8% of imports). Germany is the main trading partner (its share in the trade turnover is 36.1%), followed by Italy, Switzerland, France, and Hungary by a wide margin. Trade with Eastern European countries is growing steadily: exports to these countries (excluding CIS countries) amounted to 13.5 billion euros (17.5%), and imports from them – 10.2 billion euros (13.2%).

Trade turnover between Austria and the Russian Federation has also been growing in recent years: from 1893 million euros in 2000 to 1985 million euros in 2002, however, imports from the Russian Federation fell from 1238 million to 1032 million, and exports to the Russian Federation increased from 655 million to 953 million. The main exports from Austria to the Russian Federation are machinery, products of the chemical industry (primarily pharmaceuticals), paper and cardboard, steel pipes for oil production, and imports from the Russian Federation of energy resources and metals.

The balance of payments on current operations in Austria in 2002 was positive (both in goods and services). The balance of capital movements is more often negative or with a slight plus.

Foreign investment on the basis of reciprocity is granted national treatment in Austria. Established in 1983, the state specialized agency successfully supports the placement of foreign enterprises in Austria. The largest foreign investor is Germany (approx. 30% of investments).

Economy of Austria