Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Austria is a sophisticated, export-oriented EU market, bordered by Germany, Switzerland, Italy, as well as several smaller Central-Eastern European countries where it holds strong business and cultural ties. The U.S. and Austria share a robust and long-standing bilateral economic relationship that creates employment and wealth in both countries. U.S. companies can benefit from this positive business environment by expanding their European strategy to include Austria, especially in best prospect sectors: life sciences, advanced manufacturing, technology, education, and agricultural products.
As the Austrian economy recovers from the pandemic recession of 2020, forward-looking trends are mirroring much of Europe and the United States. The post-pandemic workplace is becoming more agile and technology-oriented with many workplaces retaining some form of telework. Austria is structuring its post-pandemic economic regrowth and government financing around building a more sustainable economy with a focus on digital and innovative solutions to reduce carbon emissions while boosting competitiveness. This includes Austrian government policies and incentives aimed to build its domestic capacity in priority sectors including health, digital and green technologies. U.S. companies looking at positioning themselves in the Austrian market should carefully assess their strategies in these contexts to maximize their business success.
Key Facts (2020):
Population: 8.9 million
GDP (per capita): $430.1 billion ($48,326)
GDP growth: -6.3% (2021 projection: 4%)
Inflation (CPI): 1.4%
European Union Member since 1995
Source: Statistics Austria (2020 avg. Euro 1:US$ 1.14)
In 2020, Austria experienced a significant COVID-precipitated recession with a -6.3% GDP decline. Hardest hit were the hospitality and tourism sectors, along with the arts, recreation, and other services. As of August 2021, the Austrian government and leading economic research institute WIFO project 4% annual GDP growth for 2021 and 5% growth for 2022.
According to the Austrian government data, the pandemic-related disruptions in 2020 resulted in a significant decline in Austrian international trade, with total imports falling by -7.1% and exports declining by -8.5%. Still, the Austrian economy remains highly international with more than one-half of GDP linked to exports. The U.S. remains Austria’s second largest export market, behind Germany, and is Austria’s fourth most important overall trading partner. U.S. and Austrian companies invest heavily in each others’ countries which contributes to this robust trade relationship. Austria is the United States’ second fastest growing source of foreign direct investment and the U.S. ranks as Austria’s fourth-largest investor source country and the largest outside the EU. U.S. services exports also play an important role in this economic partnership, with U.S. services exports to Austria valued at almost one-third of product exports in 2020.
Notwithstanding Austria’s overall import market shrinkage in 2020, the U.S. export share of Austrian imports fell to the sixth from the fourth position, while China increased its import position to second from third place and neighboring EU supplier countries Italy and Switzerland surpassed U.S. market share.
For 2020, U.S. Census data shows that U.S. goods exports to Austria fell to $3.4 billion, reverting to 2018 levels from their 2019 historic peak of $5.7 billion. U.S. exports to Austria in 2020 were negatively affected by Austria’s economic contraction during the pandemic, as well as by global logistics interruptions. Further, the U.S. export spike to Austria in 2019 that resulted in large part from a $1.5 billion surge in organic chemical exports linked to a new U.S. pharmaceutical production facility did not continue in 2020. U.S. Census data captures only a portion of the total value of U.S. products arriving to Austria since it does not count non-direct export channels, such as through European distribution. As a reference, Austrian government import data reported $5.7 billion in U.S. product imports for 2020.
Leading U.S. goods exports to Austria in 2020 were pharmaceutical products (mostly blood plasma), civilian aircraft and parts, machinery, medical and precision instruments, mineral fuels (primarily coal), and chemicals.
Leading U.S. service exports to Austria are travel and tourism, transportation, financial services, business services, intellectual property earnings, and computer services. In 2020, US. service exports to Austria dropped precipitously from $1.8 billion in 2019 to $1.1 billion primarily due to pandemic induced declines in travel and to a lesser extent transportation.