major macro economic indicators
|2020||2021||2022 (e)||2023 (p)|
|GDP growth (%)||-6.6||4.7||5.0||0.8|
|Inflation (yearly average, %)||1.4||2.7||8.6||8.0|
|Budget balance (% GDP)||-8.0||-5.9||-3.5||-2.8|
|Current account balance (% GDP)||3.0||0.4||0.7||0.7|
|Public debt (% GDP)||82.9||82.3||79.0||75.9|
(e): Estimate (f): Forecast
- High standard of living (GDP per capita relatively high compared to neighbouring countries)
- Industrial and tertiary diversification, high value-added
- 31% of energy consumption (including imports) sourced from renewable supplies (2021), main source is hydro-energy, share of renewable energy in power production is 78%
- Major tourist destination (8th worldwide in 2020, tourism represented 7.5% of Austria’s GDP before the pandemic)
- High public expenditure on R&D (3.2% of GDP in 2021)
- Very dependent on the German economy and, to a lesser extent, Central/Eastern European economies
- Banking sector exposed to Central-Eastern European and Balkan countries
- Not a member of NATO and no official intention to seek membership
Weaker economic growth is cushioned by foreign tourism
The effects of the Russian invasion in Ukraine are still weighing on the economic outlook for 2023. While Austria had only very limited general trade relationships with Russia and is therefore only mildly directly impacted by the EU sanctions against Russia and Belarus, Russia still accounted for 80% of Austria’s natural gas imports in 2021. Natural gas represented 22.7% of Austria’s energy consumption, i.e., the second biggest single energy source after oil (34.5%), meaning that Russia plays only a minor role for Austrian oil-imports, representing less than 8% of the total energy consumption. While Russia is still delivering natural gas to Austria, the country has decreased its dependence on Russia and reduced Russia’s share of natural gas imports to 47%. Furthermore, Austria’s consumption behaviour has changed, and more gas is being booked from Norway, Northern Africa and Central Asia. An unplanned stoppage of all gas deliveries from Russia, however, remains the sword of Damocles hanging over the economic outlook. The Austrian economy should have started with a small decrease into the year and then should only mildly recover over the term of 2023. The main driver is the ongoing high inflationthat peaked at above 11% in January 2023. It was also the highest inflation level experienced by modern Austria (since the start of the time series study in 1958). Over the year 2023, inflation should ease somewhat, but this would be less the result of decreasing prices than of monthly prices increasing at a slower pace than a year ago. This ongoing price pressure is still expected to weigh on the purchasing power of private households as well as companies, and should reduce private consumption as well as investment. Given the fact that at the end of 2022, several unions obtained wage increases of between 6% and 8% year-over-year for 2023, the loss of purchasing power was kept only partly in check. They have maintained inflation pressure for longer. On that score, the negotiation power of employees is very favourable, given that the unemployment rate has remained relatively low. With the baby-boomer generation slowly retiring, the new labour force is too small to fill all jobs, which increases the market power of employees who can demand higher wages. Another aspect that is weakening the economy is the manufacturing sector that is highly integrated into Germany’s and is therefore suffering from lower demand from its larger neighbour (already the case in 2022). As German manufacturing will probably still be held to ransom by very high commodity prices and supply chain issues, the Austrian manufacturing sector will also scale down capacities and invest less this year. The trade in goods should be very modest given the fact that the main export destinations - Germany, Italy, Switzerland and Poland - will all experience a stagnation or only limited growth in 2023. The main positive factor for GDP growth in 2023 is tourism. The number of tourists had halved between 2019 and 2021. The reason was not bad the summer weather, on the contrary. With travel restrictions applied in other countries, Austria attracted even more than the usual number of German tourists. However, the ski seasons were a non-event. However, in the winter of 2022-23, the booking rates shot up despite the expense, as it appears that tourists still have enough savings. The push from tourism, together with some state support measures capping electricity prices, payments to vulnerable groups, and ongoing investments related to NextGeneration EU funds (0.9% of GDP between 2021 and 2026) will cushion weaker economic growth. The ECB however, already increased its main refinancing rate by 250 basis points to 2.5% in 2022, by 100 basis points to 3.5% in spring 2023 and is expected to increase the key rate to 4.0% in 2023 in a bid to stabilise inflation expectations. In addition, from March, the ECB will slowly reduce its balance sheet by €15 billion a month. However, the amount could increase from June onwards, which is likely to weigh on private investment, especially in the construction sector.
Narrower budget deficit and stable current account surplus
In 2023, the current account surplus should remain robust on the back of the tourism sector, which will balance out the losses coming from the trade in goods deficit, due to the value of imports increasing faster than that of exports. Furthermore, the primary income balance should remain in deficit due to the expected losses of Austrian investors abroad.
The new state support measures to fight the energy price crisis are smaller than the pandemic support measures, which were still in effect in the first half of 2022. Hence, public expenditure should be smaller in 2023, although tax revenues should remain stable or even decrease, due to the income tax brackets adapting to inflation trends. Taken together, the public deficit should shrink along with public debt.
An unequal pair muddles through
Since December 2021, Karl Nehammer from the centre-right Austrian People's Party (ÖVP) is the Chancellor of the Alpine Republic and leads a coalition comprised of ÖVP (71 out of 183 seats in Parliament) and the Greens (26 seats).
Nehammer is the successor to Alexander Schallenberg (ÖVP), who stepped down after only two months in office after Austria’s Chancellor and leader of the ÖVP, Sebastian Kurz, announced his resignation from Austrian politics. Sebastian Kurz quit after a corruption scandal and Schallenberg, the former Minister of Foreign Affairs, stood in as Chancellor at short notice. But public support for the government further eroded, forcing Schallenberg to resign (he again became Minister of Foreign Affairs) to demonstrate a clean break with the Kurz administration. Nevertheless, public support for ÖVP continued to plummet owing to the population’s extreme dissatisfaction over the government’s handling of the energy price crisis. In addition, the cooperation between the ÖVP and Greens remains troubled owing to major disagreement over the environment and migrants. Nevertheless, it is expected that the coalition will stay in place until 2024 as the polls show that it is very unsure if the ÖVP or the Greens may be part of a future coalition. Instead, the right-wing populist FPÖ (claiming 28% of voter intentions) and the social-democratic SPÖ (23% in spring 2023) are currently in the top-positions. In the past, the SPÖ always refused to cooperate with the FPÖ, but a coalition between these two parties can no longer be entirely ruled out.
Last updated: April 2023
SWIFT and SEPA (within the EU) transfers are commonly used for domestic and international transactions and offer a cost-effective, quick, and secure means of payment.
Bills of exchange and, to a lesser degree, cheques are most commonly used as a means of financing or payment guarantee. Nevertheless, neither are widely used nor recommended, as they are not always the most effective means of payment., bills of exchange must meet relatively restrictive mandatory criteria to be valid, which deters business people from using them. In parallel, cheques need not be backed by funds at the date of issue, but must be covered at the date of presentation. Banks normally return bad cheques to their issuers, who may also stop payment on their own without fear of criminal proceedings for misuse of this facility.
As a rule, the collection process begins with the debtor being sent a demand for payment by registered mail, reminding him of his obligation to pay the outstanding sum plus any default interest stipulated in the sales agreement or terms of sale.
Where there is no interest rate clause in the agreement, the rate of interest applicable semi-annually from August 1, 2002 is the Bank of Austria’s base rate, calculated by reference to the European Central Bank’s refinancing rate, marked up by eight percentage points.
For claims that are certain, liquid and uncontested, creditors may seek a fast-track court injunction (Mahnverfahren) from the district court via a pre-printed form. The competent district court for this type of fast-tract procedure expedites the requisite action for ordinary claims up to EUR 75,000 (previously EUR 30,000).
With this procedure, the judge will issue an injunction to pay the amount claimed plus the legal costs incurred. If the debtor does not appeal the injunction (Einspruch) within four weeks of service of the ruling, the order is enforceable relatively quickly.
A special procedure (Wechselmandatsverfahren) exists for unpaid bills of exchange under which the court immediately serves a writ ordering the debtor to settle within two weeks. However, should the debtor contest the claim, the case will be tried through the normal channels of court proceedings.
If the debtor has assets in other EU countries, the creditor may request the Vienna Commercial Court to issue a European Payment Order for undisputed debts, enforceable in all EU countries (except Denmark).
Where no settlement can be reached, or where a claim is contested, the last remaining alternative is to file an ordinary action (Klage) before the district court (Bezirksgericht) or the regional court (Landesgericht) depending on the claim amount or type of dispute. Defendants have four weeks to file their own arguments.
With regards to the regional courts, defendants are expected to put forward their own arguments in response to the summons, and are allowed four weeks to do so.
A separate commercial court (Handelsgericht) exists in the district of Vienna alone to hear commercial cases (commercial disputes, unfair competition lawsuits, insolvency petitions, etc.).
During the preliminary stage of proceedings, the parties must make written submissions of evidence and file their respective claims. The court then decides on the facts of the case presented to it, but does not investigate cases on its own initiative. At the main hearing, the judge examines the written evidence submitted and hears the parties’ arguments as well as witnesses’ testimonies. An enforcement order can usually be obtained in the first instance within about ten to twelve months. The Civil Procedure Code provides that the winning party at issue of the lawsuit is entitled to receive full compensation from the losing party of all necessary legal fees previously incurred.
Enforcement of a legal decision
A judgement becomes enforceable when it becomes final. If the debtor does not respect the court’s judgement, the court can issue an attachment order or a garnishment order. Alternatively, the court can seize and sell the debtor’s assets.
For foreign awards, circumstances may vary depending on the issuing country. For EU countries, the two main methods of enforcing an EU judgment are the European Enforcement Order or under the provisions of the Brussels I regulations. For non-EU countries, judgments are recognized and enforced provided that the issuing country is party to an international agreement with Austria.
Out-of Court proceedings
Out-of court restructuring efforts and negotiations are usually antecedent to insolvency proceedings. They constitute a means to obtain recapitalization loans in exchange for a secured creditor status.
A pre-requisite for a restructuring proceeding is that the debtor files for the opening and at the same time submits a restructuring plan. This proceeding is either self-administrated or administrated by an administration. For self-administrated restructuring, the debtor must file an application of self-administration complemented by qualified documents and a restructuring plan that provides a minimum quota of 30%.
Liquidation proceedings aim to equitably realise the various creditors’ rights. The proceedings are led by a trustee in bankruptcy which takes control of the business, sells the assets, and divides the proceeds among the creditors.
Retention of title
Similar to Germany, Retention of Title is a written clause in a contract, which states that the supplier will retain the ownership over the delivered goods until the buyer made full payment of the price. This usually takes one of three forms:
- simple retention: the supplier will retain the ownership over the goods supplied until full payment is made by the buyer;
- expanded retention: the retention is expanded to further sale of the subsequent goods; the buyer will assign the claims issued from the resale to a third party to the initial supplier;
- extended retention: the retention is extended to the goods processed into a new product, and the initial supplier remains the owner or the co‑owner up to the value of its delivery.