Austria Economy Report : The Gateway to Eastern Europe

Austria is maybe one of the most self-critical and conservative countries. Once it tried to grasp for power, but this just ended in losing two wars and barely making it survive as a country. So many Austrians are very much inwards oriented. Economically, Austria has been doing exceptionally well for some two decades, in the 90s and early 2000s. It managed to become more prosperous than Germany in GDP per capita terms, which is a big accomplishment for Austria. It had the lowest unemployment rate in Europe and so on. Austria has not been doing quite as well for the last decade or so. Unemployment has been rising, and the GDP growth was lackluster for a while now. It's too early to say if this is just an episode or a new trend for the next 20 years. According to statistical data provided by the European Commission, Austria is in the top positions in terms of productivity at work in the EU-28. The level of industrial productivity has also traditionally been high. Austria offers very favorable tax conditions for businesses: a fixed corporate income tax rate of 25% and a group tax system (advantageous for headquarters with a holding structure). Austria, thanks to both its geographical position and the intensity of its historical ties, boasts excellent relations with Central-Eastern Europe, a region in which it is among the major foreign investors, constituting - especially Vienna - also a highly appreciated hub for foreign companies that want to expand in that area. Austria ranks among the richest countries in the European Union. According to Eurostat data (2018), it ranks fourth in terms of per capita GDP at purchasing power parity. Austria has not only traditionally enjoyed excellent political and social stability, but also boasts a low crime rate and conditions of high stability in energy supplies. Austria’s small and mid-sized industry depends on the German market; they have the role of component/supplier industry. Austria’s home market is too small; East Europe is from the economic structure, still too weak. Here are some examples of globally-known Austrian companies: RedBull (marketing company which happens to produce energy drinks). Erste Group (bank). OMV (oil and gas company). voestalpine (steel company). Strabag (building company). Spar (retail). Rewe (retail). Magna (automotive supplier). Novomatic (gambling). Welcome to The Atlantis Report. Austria ranks among the most prosperous and innovative countries in the European Union and has more effectively coped with the economically turbulent period prevailing since 2008 than most other European nations. The business location scores points thanks to its modern infrastructure, top-notch technologies, well-educated and highly-motivated employees, and also offers high reliability of energy supplies in addition to political, social, and economic stability. Moreover, Austria is the ideal base for ensuring market access to the dynamic markets of South East and Eastern Europe. A high-quality infrastructure comprises the heart of a flourishing economic system. Austria boasts not only an optimal transportation mix and the European airport offering the most flight destinations to Eastern Europe, but also an outstanding logistics infrastructure. At the beginning of the 20th century, the population of Vienna reached 2 million people - it was the fourth largest city in the world in terms of the number of inhabitants. On the territory of the summer palace of the Austrian monarchs, located in Vienna, the oldest zoo in the world still works - animals were settled in the zoo of Schönbrunn in the mid-18th century. Vienna ranks second among the cities of the world for quality of life. Vienna is one of the few European capitals where grapes are grown. At the end of the 17th century, a third of the population of Vienna died from a plague epidemic. In just ten years, the city was struck by a new wave of illness, which killed at least 11 thousand people. In Vienna, Lienz Park is located - a part of the Viennese forest where wild animals roam freely. The Sea House is an aquarium in Esterhazy, a Viennese park located in the Luftwaffe anti-aircraft tower during the war. The State Opera in Vienna is one of the leading opera houses in the world, thanks to which the capital of Austria is also called the musical capital. Vienna - the record for the number of world figure skating championships held in the city. Vienna is the twin city of Moscow. The oldest newspaper in the world is published in Vienna, the first edition of which was published in 1703. The annual Vienna Ball is the most prestigious event in the high life of Europe. Tickets for it cost from 200 to 20 000 euros, but they are still bought up long before the day of the celebration. The performances of the Vienna Opera are divided into three categories - “A” (for fans of the genre), “B” (for music fans), and “C” (for other listeners). In Vienna, you can drink water from the tap without fear for health, as it enters the city water supply straight from mountain springs in the Alps. Vienna is the birthplace of croissants. The crescent-shaped bun was first cooked in honor of the victory over the Turks. This pastry was brought to France by Marie Antoinette, who tasted a croissant in Vienna and admired its taste. In the Viennese cafe "Sacher" prepare a special cake with the same name. Delicacy consists of two chocolate cakes with apricot jam between them. Ferris wheel in Vienna's Prater - the oldest in the world. The 65-meter-high attraction, installed in the middle of the 19th century, became one of the symbols of the capital of Austria. The museum quarter in Vienna is the largest complex of museums in Europe. Works of art are exhibited here in an area of ​​60,000 square meters. The Vienna Stock Exchange, founded in the second half of the 18th century, was the first to emerge in the world. It still remains one of the major stock markets. In 1999, Moscow presented Vienna with a monument to Alexander Pushkin, which was installed next to one of the thermal complexes. Stalin spent five weeks in Vienna, as evidenced by a memorial plate on the house where he lived. It was the longest trip abroad by the Soviet leader. In the bars and clubs of Vienna, “automatic sobering stations” are installed for over-walking visitors — just drop a coin, and concentrated ammonia strikes the drunkard's face. Intoxication, as they say, passes instantly. Austria stands out due to its historically evolved role as a bridgehead to South East and Eastern Europe and its high-quality logistics infrastructure. At the beginning of 2014, Deutsche Lufthansa relocated its distribution center for Eastern Europe from Budapest to Vienna, and the logistics specialist DAHMS solutions selected Austria as the hub of its new e-commerce logistics center from which it supplies online retailers throughout Europe. The two firms followed the example of numerous international companies such as Volvo, REWE, Fresenius Kabi, and Charles Vögele, which have selected Austria to be their distribution centers and logistics interfaces. In Austria, the composition of GDP, based on 2018 data, is as follows: 1.3% comes from the primary sector, 28.4% from the secondary sector, and over two thirds (70.3%) from the tertiary sector. In 2018, the Austrian GDP increased by 2.7% in real terms, after + 2.6% in the previous year. The reason for this slight improvement is primarily attributable to the positive development of exports, private consumption, and investments. For 2019 a growth rate decrease is expected to + 1.7%, and for 2020, a further reduction to + 1.2% due to the economic slowdown. Exports in 2018 increased by 5.9% in real terms; similarly, there was also an increase in imports of 4.6%. For 2019 increases of 2.8% and 3.2% are expected respectively, again in real terms, due to the slowdown in the international economy, which is expected to cause further reductions, albeit with a positive balance, respectively at 2, 3% and 2.4% in 2020. Private consumption increased by 1.1% in 2018 in real terms, thanks to the increase in real wages. For 2019, a 1.5% increase is expected, again due to the increase in real wages, as well as the tax relief for families approved by the Government and introduced at the beginning of the year. A steady increase in private consumption is expected for 2020 (+ 1.6%), which will help sustain growth. For investments, a real increase of 3.9% was recorded in 2018. Investments in machinery increased by 4.3%, while those in the construction sector grew by 3.7%. A further 3.1% increase in total investments is forecast for 2019, and a significant slowdown in growth is also expected on this front in 2020. Inflation increased to 2.3% in 2018. A rate of 1.5% is forecast for 2019. The decrease in inflation can be explained in particular by less strong increases in energy prices. The inflation rate is expected to remain stable in 2020. The unemployment rate was 4.9% in 2018. A further drop to 4.6% is expected for 2019. Austria remains one of the European Union countries with the lowest level of unemployment. However, this variable could undergo a slight increase in 2020. For 2021, the Austrian economic research institutes are forecasting an improvement in the economic situation and GDP growth of 1.4%. Source: Wirtschaftsforschungsinstitut (WIFO), Oesterreichische Nationalbank (OeNB). So what are the challenges for the Austrian economy that Austria needs to address in the next 5 to 15 years? Inefficient politics.: Nine states and one federal state. The Landeshauptmänner (chiefs of the nine states) are sometimes more powerful than the Bundeskanzler. The parties are chaotic. There is a lot of fight for power. All in all, there is a lot of corruption. Even if there is a lot of pressure for efficiency, politics is resisting change. Conservative Mentality, Resistance to Progress and Innovation.: In Austria, it takes a long time to bring change. Austria is the only developed country without Google Streetview or integration of public transport data into Google Maps. In many situations, the average Austrian resists innovation. There are not many entrepreneurs and those who try to face heavy restrictions. Migration.: Right now, Austria is facing a huge migration from Asia and Africa. These people are mostly migrants without any higher education and with a mindset that does not match the Western ideologies. There is a huge risk that many of them will never integrate into society. Social unrest because of the total reduction of income.: Continuing the migration, many people in Europe are upset that a migrant in Austria gets more money from the state that in other EU countries some people earn in a month. In total, the middle class is squeezed with high debts. At some point, many of the well-educated young people will leave, and with that, the country might face a lot of social unrest. Many old people, many people who do not want to work or cannot and the young capable ones, are leaving. This was The Atlantis Report. Please like. Share. And Subscribe. Thank You.











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