1. Attractive business environment

  • Austria is the fourth richest country in the EU
  • Above-average purchasing power of Austrian consumers
  • Excellent infrastructure
  • Modern and efficient public administration
  • Highest quality of life


2. Stability and Security

  • Political stability and reliable legal system
  • High personal security
  • Good relations between employers and employees
  • Low strike rate and high level of social peace
  • Outstanding level of energy security


3. Tax advantages

  • Low corporate tax rate
  • Group taxation scheme
  • No wealth or trade tax
  • Cutting-edge Austrian trust regulations
  • Attractive research promotion incentives


4. Productivity

  • High labor productivity and low unit labor costs
  • Top motivated and highly qualified employees


5. Central Location

  • Ideal East-West business hub
  • Location for 380 CEE headquarters of multinationals
  • Coordination headquarters for about 1,000 foreign companies
  • Competent consultants with extensive CEE know-how
  • Leading flight and freight logistics hub to Eastern Europe


6. Business-oriented education

  • Dual education system combines theoretical and practical teaching
  • Optimal cooperation between business and science



7. Economic data of Austria

*) Forecast //  Quelle: Eurostat, European Commission (Ameco database), Austrian Institute of Economic Research, Statistics Austria (07/2017)


8. The success factors

Top stability, excellent CEE know-how, highly qualified staff, strong industries, a prosperous market in the heart of Europe.

a) Austria ranks fourth in the globalization index

Austria ranks among the most globalized countries in the world. This is the conclusion of the KOF Index of Globalization 2017 compiled by the renowned Swiss Federal Institute of Technology (ETH) in Zurich. The annual index measures the economic, social and political dimensions of globalization in 193 countries. Austria rates an impressive fourth behind the Netherlands, Ireland and Belgium.

The economic dimension of globalization comprises the extent of cross-border trade, investment and revenue flows in relation to the gross domestic product as well as the impact of trade and capital transaction restrictions. The social dimension of globalization reflects the level of cross-border dissemination of information and ideas, whereas the political dimension focuses on the strength of political cooperation among the countries.

b) Vienna ranks among the top 20 globalized cities in the world

The Global Cities Index of the American consulting company A.T. Kearney serves as an indicator for the global engagement of large cities, and represents the worldwide importance of a city. The 125 most influential cities are evaluated with respect to their economic activity, human capital, information exchange, cultural offering and political engagement. Accordingly, the index serves as an ideal instrument for companies to select a business location.

In the current ranking, Vienna is rated 19th in the world, and thus ranks among the most attractive cities in Europe along with London, Paris, Brussels, Madrid and Berlin. London and New York are the top two cities when it comes to globalized metropolises. According to the study, Vienna primarily holds its ground due to its above-average economic activity.

Among the top 20 cities, seven are in Europe, eight in the Asia-Pacific region and five in North and South America.

c) Austria in the EU

After successful accession negotiations and a national referendum, in which two-thirds of the Austrian population voted in favor of joining the EU, Austria formally became an EU member state on January 1, 1995 together with Sweden and Finland. As a result, the fundamental freedoms enjoyed by people in the EU also extend to Austrians. This entails the freedom of movement for all workers and thus the free choice of employment, right of establishment and freedom to provide services, and the free movement of capital and goods. In return, Austria is obliged to adopt EU regulations.

d) Austria remains one of the wealthiest economies in the euro area

  • Austria outperformed the euro area in terms of GDP growth and, hence, welfare levels in the last decade. Since 2014, however, the growth rates have been lagging behind euro area growth.
  • The Austrian economy is well diversified and its sectoral structure is well balanced.
  • Social stability is high, given high employment and low unemployment rates by international standards as well as a low strike frequency.
  • Since September 2012, the HICP in Austria has exceeded inflation in the euro area and in individual euro area countries. However, since the launch of the euro in 1999, HICP inflation has averaged 1.8% in the euro area and in Austria, thus being in line with the ECB’s price stability target.
  • House prices have risen markedly in some domestic regions and market segments since the onset of the financial crisis, but for the country as a whole they are broadly in line with economic fundamentals.
  • Austria’s saving ratio (2015: 6.9%) is below the euro area average. The large stock of financial assets held by the household sector totaled EUR 602 billion (or 177% of GDP) in 2015, serving as an important refinancing source for other economic sectors.
  • Austria’s household debt ratio remains at a level of slightly above 50% of GDP; both this ratio and Austria’s corporate debt ratio (2016 Q1: 236.1% of gross operating surplus or 91.9% of GDP) are below the corresponding euro area ratios.
  • Given high employment growth in a context of moderate output growth, Austria has been losing ground in unit labor costs and productivity per employee vis-à-vis the euro area.
  • Despite these productivity losses a steady string of current account surpluses since 2002 confirms the international competitiveness of the Austrian economy (2015: current account surplus of 1.9% of GDP) and has enabled Austria to balance its international investment position (2015: EUR 9.9 billion or 2.9% of GDP).
  • Foreign trade in goods is well diversified both by region and by product type. In 2015, Austria transacted about half of its foreign trade with other euro area countries, i.e. without any exchange rate risk. One-third of goods exports went to Germany, another 21% to Central, Eastern and Southeastern Europe (CESEE) countries.
  • Austria’s budget balance ratio improved significantly from –2.7% of GDP in 2014 to – 1.0% of GDP in 2015. This was due to a decrease in capital transfers to banks and due to strong revenue growth. The outlook for 2016 implies a worsening of the budget balance ratio due to the 2016 tax reform and additional expenditure related to refugees.
  • The increase of the government debt ratio to 85.5% of GDP in 2015 (2014: 84.4% of GDP) was mainly the result of debt-increasing (but not deficit-increasing) transactions linked to the state-owned bad banks. For 2016, the debt ratio can be expected to improve on the back of a decline in capital transfers to banks.


e) Overview of major economic developments in Austria

  • Consolidated net profits of Austrian banks recovered significantly in 2015. This improvement, however, was driven above all by lower credit risk provisions and write-downs as well as a return to increased profits by CESEE subsidiaries. In contrast, interest income – the single most important income component of Austrian banks – decreased. While this can be attributed to a fall in total assets in Austria, in the majority of CESEE countries it was primarily due to declining margins.
  • The capitalization of Austrian banks has improved, but their regulatory capital ratios continue to be below-average compared to those of their international peers. On the plus side, Austrian banks significantly outperform their peers when leverage ratios are used as a benchmark. Capital requirements are, however, going to rise gradually as the systemic risk buffer (SRB) and the other systemically important institutions (O-SII) buffer endorsed by the Austrian Financial Market Stability Board (FMSB) are being phased in.
  • Exposures to CESEE have remained broadly stable in recent years. At the same time, developments have differed across countries, reflecting among other things geopolitical developments.
  • The profitability of Austrian banks’ CESEE subsidiaries improved considerably in the first quarter of 2016, with subsidiaries in all countries of the region making positive profit contributions. The highest profits were made in the Czech Republic, Romania and Russia, with the latter’s profits having been down against the same period in 2015, however.
  • Action taken by the Austrian supervisory authorities against foreign currency lending continues to be effective. Compared with October 2008, the outstanding volume of loans denominated in Swiss francs has decreased by more than half in Austria.
  • The macroprudential guidance for large internationally active Austrian banks adopted by the Austrian authorities in 2012 (“sustainability package”) has contributed to strengthening the local refinancing structure of Austrian banks’ CESEE subsidiaries. Their loan-todeposit ratio decreased from 117% in 2008 to 88% in the first quarter of 2016, reflecting above all an increase in local savings deposits. This means that loan growth in CESEE has increasingly been funded through local sources.
  • The FMSB considers it necessary to take preventive action and expand the macroprudential toolbox by providing the possibility of imposing limits on the loan-to-value ratio, the debt-to-income ratio or the debt service- to-income ratio in new lending. Such an expansion is meant to ensure that the FMSB can act on systemic risks arising from a real estate price boom. The Federal Minister of Finance has been informed to this effect.
  • The Single Supervisory Mechanism (SSM), which had become operational in November 2014, made important progress toward harmonizing supervisory methods: Joint Supervisory Teams (JSTs) were set up, cooperation with the national competent authorities (NCAs) was successfully initiated and the annual Supervisory Review and Evaluation Process (SREP) now follows a common methodology.
  • On July 29, 2016, the European Banking Authority (EBA) published the results of its most recent EU-wide stress test exercise. The results for the two participating Austrian banks met supervisors’ expectations, given their relatively low initial capital levels. The results of the stress test serve as a basis for the supervisory assessment of the capital positions of the examined banks.
  • The Single Resolution Mechanism (SRM) became fully operational on January 1, 2016. The Single Resolution Board (SRB) is the central resolution decision-making body for large banks that are failing or likely to fail; its decisions are put into practice together with the respective national resolution authorities.
  • The full implementation of the European Deposit Insurance Scheme (EDIS) would complete the three-pillar based banking union. However, this process requires the relevant existing national legislation to be harmonized at a European level and the remaining risks in the European anking sector to be effectively reduced. European initiatives to this effect are already in place. According to the November 2015 European Commission proposal, EDIS is to be realized in several stages and become fully effective in 2024.