Austria: Economic and Political Overview
In this page: Economic Outline | Political Outline
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) | 517.66 | 535.80 | 559.22 | 584.46 | 605.49 |
| GDP (Constant Prices, Annual % Change) | -0.8 | -0.6 | 1.1 | 1.7 | 1.6 |
| GDP per Capita (USD) | 56,856 | 58,669 | 61,080 | 63,678 | 65,804 |
| General Government Balance (in % of GDP) | -2.5 | -2.5 | -2.5 | -2.6 | -2.7 |
| General Government Gross Debt (in % of GDP) | 77.5 | 78.7 | 79.6 | 79.7 | 79.8 |
| Inflation Rate (%) | 7.7 | 3.0 | 2.5 | 2.3 | 2.1 |
| Unemployment Rate (% of the Labour Force) | 5.1 | 5.6 | 5.6 | 5.3 | 5.0 |
| Current Account (billions USD) | 13.78 | 13.98 | 13.65 | 13.40 | 13.11 |
| Current Account (in % of GDP) | 2.7 | 2.6 | 2.4 | 2.3 | 2.2 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
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 data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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- 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
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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