major macro economic indicators
|2019||2020||2021 (e)||2022 (f)|
|GDP growth (%)||1.4||-6.7||4.3||4.9|
|Inflation (yearly average, %)||1.5||1.4||2.8||3.1|
|Budget balance (% GDP)||0.6||-8.3||-6.1||-2.5|
|Current account balance (% GDP)||2.8||2.5||2.0||2.3|
|Public debt (% GDP)||70.6||83.2||83.7||80.3|
(e): Estimate (f): Forecast
- Industrial and tertiary diversification, high added value
- Comfortable current account surplus
- More than 30% of energy sourced from renewable supplies
- Major tourist destination (11th worldwide)
- High public expenditure on R&D (3% of GDP)
- Dependent on the German and Central/Eastern European economies
- Banking sector exposed to Central, Eastern, and South-Eastern European countries
- Multiple layers of power and administration (federal, Länder, municipalities)
Economic growth supported by strong household consumption
After a deep recession in 2020 triggered by the pandemic, the Austrian economy partly rebounded in 2021. The export-oriented economy benefited from the revival of global trade and its intensive business links with Germany and Central & Eastern Europe. In 2022, foreign trade is expected to progress further thanks to the recovery of the main European partners. However, the contribution of net exports to GDP growth will be marginal due to the almost equal improvement in imports. Domestic demand should be the driving force of the economy in 2022. Household savings accumulated during pandemic lockdowns will be directed towards private consumption, although the full increase is unlikely to be channelled into it in 2022. Such a trend has been already observed, as the gross household savings rate reached 14.8% of disposable income at the end of 2019, peaked at 24.5% at the end of 2020, then decreased to 17.1% in mid-2021.It will also fuel wealth formation, and is expected to be spent over several years. Furthermore, incomes will be supported by the tax reform of 2022-2024, which includes tariff reduction of the second stage, increase of the family bonus and child surplus, decrease of the health insurance contribution rate for low-income earners and the climate bonus. The tax reform is estimated to reduce the tax bill of private households by 1.2% of disposable household income in 2022, according to the Austrian Institute of Economic Research (WIFO). Income and consumption will also be supported by an improving labour market after the deterioration experienced in 2020. The unemployment rate should decline from 9.9% in 2020 to 7.1% in 2022, according to the national methodology definition. Concomitantly, wages should grow by 5% in 2022, driven by a tighter labour market, as labour shortages have been reported again after a temporary relief during the first waves of pandemic. Nevertheless, supply shortages and a steep rise in prices of commodities and various inputs will be the main obstacle, affecting Austrian companies in 2022. Along with the reversal of the value-added tax cut, this will keep inflation above 3% in 2022, before gradually declining in the subsequent years. Fixed asset investments will be underpinned by the expansion of the manufacturing sector, allocations from the NextGenerationEU (NGEU) fund, as well as the investment premium. The latter subsidy will trigger additional machinery and equipment investment that probably would not have been made otherwise. At the same time, a reduction in the corporate tax rate and the introduction of an eco‑investment tax allowance should limit a drop in investments in the next years.
Declining budget deficit and increasing current account surplus
In 2022, the current account surplus should increase on the back of the trade surplus, thanks to favourable global trade and the improvement in the tourism sector, which accounts for about 15% of GDP. Remittances of foreign workers sending money back to their country of origin will continue to fuel a high secondary income deficit. The primary income account is expected to remain close to balance with an equivalent decline in the proceeds of Austrian investments abroad and foreign investments in the country.
The gradual unwinding of fiscal support, in line with the economic recovery will result in an improvement in both the public deficit and debt. However, the budget balance will remain in deficit, contrasting with the surpluses recorded before the pandemic. A mix of various expenditures will continue to fuel the budget deficit, with the ecological and social tax reform, as well as the pension increase and additional investment measures under the Recovery and Resilience Facility (RRF).
Following snap elections held in September 2019, the centre-right Austrian People's Party (ÖVP) remained the largest party (37.5% of the vote resulting in 71 out of 183 seats). Nonetheless, in October 2021, the ruling coalition, comprising ÖVP and the Greens, was destabilised by the resignation of Sebastian Kurz, the chancellor. This came promptly after the revelation that state prosecutors were investigating corruption allegations related to his aides in 2016, who allegedly used taxpayer money to pay for press advertisements in exchange for favourable coverage, including the publication of manipulated polling data. Mr Kurz denied the allegations and refused to stand down, but the Greens only wanted to continue the coalition under a different chancellor. Hence, Alexander Schallenberg, formerly the ÖVP foreign minister, took over as chancellor and as head of the ÖVP-Greens coalition, while Mr Kurz remained the ÖVP chairman and parliamentary leader of the party.
Since November 2021, the Austrian government decided to tighten restrictions for the unvaccinated at the beginning but then also for vaccinated as well as re-introduce a lockdown. The social discontent caused by such measures triggered protests and add challenges to the new chancellor.
Last updated: February 2022
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.