Economy of Austria

Economy - overview: Austria, with its well-developed market economy and high standard of living is closely tied to other EU economies, especially Germany's. Membership in the EU has drawn an influx of foreign investors attracted by Austria's access to the single European market. Through privatization efforts, the 1996-98 budget consolidation programs, and austerity measures[?], Austria has brought its total public sector deficit down to 2.1% of GDP in 1999 and public debt - at 63.1% of GDP in 1998 - more or less in line with the 60% of GDP required by the EMU's Maastricht criteria. Cuts mainly have affected the civil service and Austria's generous social benefit system, the two major causes of the government's deficit. To meet increased competition from both EU and Central European countries, Austria will need to emphasize knowledge-based sectors of the economy and deregulate the service sector. Growth, which slowed to 2.0% in 1999, probably will rebound to 2.8% in both 2000 and 2001.

Austria has a well-developed social market economy with a high standard of living in which the government has played an important role. Many of the country's largest firms were nationalized in the early post-war period to protect them from Soviet takeover as war reparations. For many years, the government and its state-owned industries conglomerate played a very important role in the Austrian economy. However, starting in the early 1990s, the group was broken apart, state-owned firms started to operate largely as private businesses, and a great number of these firms were wholly or partially privatized. Although the government's privatization work in past years has been very successful, it still operates some firms, state monopolies, utilities, and services. The new government has presented an ambitious privatization program, which, if implemented, will considerably reduce government participation in the economy. Austria enjoys well-developed industry, banking, transportation, services, and commercial facilities.

Although some industries, such as several iron and steel works and chemical plants, are large industrial enterprises employing thousands of people, most industrial and commercial enterprises in Austria are relatively small on an international scale.

Austria has a strong labor movement. The Austrian Trade Union Federation[?] (OGB) comprises constituent unions with a total membership of about 1.5 million--more than half the country's wage and salary earners. Since 1945, the OGB has pursued a moderate, consensus-oriented wage policy, cooperating with industry, agriculture, and the government on a broad range of social and economic issues in what is known as Austria's "social partnership." The OGB has announced tough opposition against the new government's program for budget consolidation, social reform, and improving the business climate, and indications are rising that Austria's peaceful social climate could become more confrontational.

Austrian farms, like those of other west European mountainous countries, are small and fragmented, and production is relatively expensive. Since Austria's becoming a member of the EU in 1995, the Austrian agricultural sector has been undergoing substantial reform under the EU's common agricultural policy[?] (CAP). Although Austrian farmers provide about 80% of domestic food requirements, the agricultural contribution to gross domestic product (GDP) has declined since 1950 to less than 3%.

Austria has achieved sustained economic growth. During the 1950s, the average annual growth rate was more than 5% in real terms and averaged about 4.5% through most of the 1960s. Following moderate real GDP growth of 1.7%, 2.0% and 1.2%, respectively, in 1995, 1996, and 1997, the economy rebounded and with real GDP expansion of 2.9% in 1998 and 2.2% in 1999.

Austria became a member of the EU on January 1, 1995. Membership brought economic benefits and challenges and has drawn an influx of foreign investors attracted by Austria's access to the single European market. Austria also has made progress in generally increasing its international competitiveness. As a member of the Economic and Monetary Union[?] (EMU), Austria's economy is closely integrated with other EU member countries, especially with Germany. On January 1, 1999, Austria introduced the new Euro currency for accounting purposes.

Starting January 2002, Euro notes and coins will be introduced and substitute for the Austrian schilling. Economists agree that the economic effects in Austria of using a common currency have been positive.

Trade with other EU countries accounts for almost 66% of Austrian imports and exports. Expanding trade and investment in the emerging markets of central and eastern Europe is a major element of Austrian economic activity. Trade with these countries accounts for almost 14% of Austrian imports and exports, and Austrian firms have sizable investments in and continue to move labor-intensive, low-tech production to these countries. Although the big investment boom has waned, Austria still has the potential to attract EU firms seeking convenient access to these developing markets.

Total trade with the United States in 1999 reached $6.6 billion. Imports from the United States amounted to $3.7 billion, constituting a U.S. market share in Austria of 5.4%. Austrian exports to the United States in 1999 were $2.9 billion or 4.6% of total Austrian exports.

GDP: purchasing power parity - $190.6 billion (1999 est.)

GDP - real growth rate: 2% (1999 est.)

GDP - per capita: purchasing power parity - $23,400 (1999 est.)

GDP - composition by sector:
agriculture: 1.3%
industry: 32.4%
services: 66.3% (1998 est.)

Population below poverty line: NA%

Inflation rate (consumer prices): 0.5% (1999)

Labor force: 3.7 million (1999)

Labor force - by occupation: services 68%, industry and crafts 29%, agriculture and forestry 3% (1999 est.)

Unemployment rate: 4.4% (1999)

Budget:
revenues: $54 billion
expenditures: $59.5 billion, including capital expenditures of $NA (1999 est.)

Industries: construction, machinery, vehicles and parts, food, chemicals, lumber and wood processing, paper and paperboard, communications equipment, tourism (1997)

Industrial production growth rate: 2.3% (1999)

Electricity - production: 56.066 billion kWh (1998)

Electricity - production by source:
fossil fuel: 31.46%
hydro: 65.92%
nuclear: 0%
other: 2.62% (1998)

Electricity - consumption: 51.891 billion kWh (1998)

Electricity - exports: 10.5 billion kWh (1998)

Electricity - imports: 10.25 billion kWh (1998)

Agriculture - products: grains, potatoes, sugar beets, wine, fruit; dairy products, cattle, pigs, poultry; lumber

Exports: $62.9 billion (1999 est.)

Exports - commodities: machinery and equipment, paper and paperboard, metal goods, chemicals, iron and steel; textiles, foodstuffs (1998)

Exports - partners: EU 65% (Germany 36%, Italy 9%, France 5%), Switzerland 5%, Hungary 5%, US 4.5% (1999 est.)

Imports: $69.9 billion (1999 est.)

Imports - commodities: machinery and equipment, chemicals, metal goods, oil and oil products; foodstuffs (1998)

Imports - partners: EU 70% (Germany 42%, Italy 8%, France 5%), US 5%, Hungary 3%, Switzerland 3% (1999 est.)

Debt - external: $31.7 billion (1998)

Economic aid - donor: ODA, $452 million (1998)

Currency: 1 Austrian schilling (AS) = 100 groschen

Exchange rates: euros per US$1 - 0.9867 (January 2000), 0.9386 (1999); Austrian schillings (AS) per US$1 - 11.86 (January 1999), 12.91 (1999), 12.379 (1998), 12.204 (1997), 10.587 (1996), 10.081 (1995)
note: on 1 January 1999, the EU introduced a common currency that is now being used by financial institutions in some member countries at a fixed rate of 13.7603 Austrian shillings per euro; the euro will replace the local currency in consenting countries for all transactions in 2002

Fiscal year: calendar year

Reference Much of the material in this article comes from the CIA World Factbook 2000 and the 2003 U.S. Department of State website.

See also : Austria