Austria has a well-developed social market economy with a high standard of living. Until the late 1980s, 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 broke apart, state-owned firms started to operate largely as private businesses, and the government wholly or partially privatized many of these firms. Although the government's privatization work in past years has been very successful, it still operates some firms, state monopolies, utilities, and services. The Schussel government's privatization program further reduced government participation in the economy. The Gusenbauer government did not reverse privatizations, and did not undertake any further privatizations. Austria enjoys well-developed industry, banking, transportation, services, and commercial facilities. Most industrial and commercial enterprises in Austria are relatively small on an international scale.
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. Austria also has made progress in generally increasing its international competitiveness. As a member of the Economic and Monetary Union (EMU), Austria has integrated its economy with those of other EU member countries, especially with Germany's. On January 1, 1999, Austria introduced the new Euro currency for accounting purposes.
In January 2002, Austria introduced Euro notes and coins in place of the Austrian schilling. Economists agree that the economic effects in Austria of using a common currency with the rest of the members of the Euro-zone have been positive.
Austria has achieved sustained economic growth and belongs to the richest countries in the EU (fourth after Luxembourg, Ireland, and the Netherlands). After a period of low growth of only around 1.0% annually during 2001-2003, Austria's economy recovered again in 2004 and 2005 and grew 2.5% and 2.9%, respectively, driven by booming exports in response to strong world economic growth. Primarily due to higher growth in Europe, particularly central and eastern Europe, and continued export growth, Austrian real GDP grew 3.3% in 2006 and 3.4% in 2007. The strong economic growth helped reduce Austria's unemployment rate to 4.4% in 2007. Predictions are for 1.7% economic growth in 2008 to be followed by a -2.9% fall in 2009 due to the world economic crisis. The economy should pick up again in 2010, with a modest 0.1% estimated growth.
Austria has a strong labor movement. The Austrian Trade Union Federation (OGB) comprises constituent unions with a total membership of about 1.3 million--about 39% of the country's wage and salary earners. The OGB has always 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." Because of a scandal involving a bank the OGB owned, the OGB lost much of its political influence and is still trying to recover.
Austrian farms, like those of other west European mountainous countries, are small and fragmented, and production is relatively expensive. Since Austria became 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 2%.
Trade with other EU-27 countries accounts for about 73% of Austrian imports and exports. Expanding trade and investment in the new EU members of central and eastern Europe that joined the EU in May 2004 and January 2007 represent a major element of Austrian economic activity. Austrian firms have sizable investments in and continue to move labor-intensive, low-tech production to these countries. About one-half of Austria's foreign direct investment is concentrated in the countries of central, eastern, and southeastern Europe. Austria still has the potential to attract EU firms seeking convenient access to developing markets in central and eastern Europe and the Balkan countries.
Total trade with the United States in 2007 reached $13.0 billion. Imports from the United States amounted to $5.1 billion, constituting a U.S. market share in Austria of 3.3%. Austrian exports to the United States in 2007 were $7.9 billion, or 5.1% of total Austrian exports. Approximately 350 U.S. firms have made investments in Austria. Investment flows indicate that U.S. foreign direct investment in Austria reached a new record total of about $12.1 billion, which represents about 10% of the total in Austria and moves the U.S. to the number two position among foreign investors in Austria.
Information by U.S. Department of State
