Economic Outline

Economic Indicators

. Elevated interest rates and energy costs dampened investment, particularly in construction and industry. Construction investment has remained negative, with housing investment contracting for a fifth consecutive year. 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 reached 4.2% of GDP, and it is projected to ease marginally to 4.1% in both 2026 and 2027. Tax revenue growth is expected to moderate as inflation eases, with Austria’s earlier expansionary fiscal stance shifting to a contractionary one worth 0.4% of GDP over the forecast period. Amid a combination of weaker nominal GDP growth and higher primary deficits, the debt-to-GDP ratio – estimated at 81.5% last year – is expected to follow an upward trajectory over the forecast horizon, rising to 83.4% by the end of 2026 and 84.9% in 2027 (EU Commission). 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 2026 and 2027, wage growth and services inflation are expected to decline, with headline inflation at 3.6% in 2025 and projected at 3.0% in 2026 and 2.5% in 2027 (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 (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 compensation per employee rose by 3.6% in 2025 and is forecast to grow by 3.0% in 2026, 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.

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