Austria's Industry and Economy under Pressure: Economic Experts Discuss Solutions
The situation in Austrian industry has deteriorated continuously since mid-2021. The Federation of Austrian Industries (IV) is now issuing an urgent warning about the consequences of this development. “Industry is in a bleak situation,” explained IV chief economist Christian Helmenstein. There is no sign of a recovery shortly, which is seriously jeopardizing the competitiveness of the location and the prosperity of the country.
The Federation of Austrian Industries (IV) warns of a continuing downward spiral for the Austrian economy. / Picture: © Wikimedia Commons / Buchhändler [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]
The latest results of the IV economic survey for the fourth quarter of 2024 paint an alarming picture: 417 industrial companies surveyed with a total of around 310,400 employees report a negative development across the board. It is particularly striking that the assessment of the current business situation has failed to improve for the 14th consecutive quarter - a historically unprecedented period.
The survey also shows that companies' production capacities are significantly underutilized and production expectations remain in negative territory. This not only has a direct impact on the employment situation in the industry but also poses a long-term threat to Austria as a business location as a whole.
Statistics Austria: Significant decline in turnover and working hours
According to the latest figures from Statistics Austria, turnover in the manufacturing sector fell by 9.1% in November 2024 compared to the same month last year. Industry was particularly hard hit, recording a decline of 10.7%. At the same time, the number of hours worked fell by 1.7% and the employment index fell by 0.4%. These figures underpin the IV's pessimistic forecasts and show that domestic industry remains under severe pressure.
WIFO and IHS: Ongoing recession and structural problems
The Austrian Institute of Economic Research (WIFO) also confirms the negative trend. Although the Austrian economy grew slightly by 0.3% in the third quarter of 2024 compared to the previous period, companies remain pessimistic in light of the difficult conditions. The construction sector and industry in particular are suffering from a prolonged recession. Without targeted economic policy measures, the situation could deteriorate further.
In its current winter forecast, the Institute for Advanced Studies (IHS) emphasizes that structural problems are slowing down the economic recovery. According to the IHS, economic output in Austria will fall by 0.9% in 2024. The continuation of the recession in industry and construction is particularly worrying. Although the IHS is forecasting slight growth of 0.7% and 1.3% for 2025 and 2026 respectively, it emphasizes the high level of economic policy uncertainty. Delayed budget consolidation could further dampen the economic recovery.
AK contradicts IV: “No reason to panic”
However, not everyone shares the assessment of the Federation of Austrian Industries. Markus Marterbauer, Chief Economist at the Chamber of Labour (AK), warns against dramatizing the situation in industry. “The IV's warning of a deindustrialization of Austria is inappropriate and even dangerous,” Marterbauer emphasized in a press release. He points out that Austrian industrial production was still 20 percent higher in November 2024 than in 2015, despite the declining figures in recent quarters. By comparison, industrial production in Germany was ten percent below the 2015 level in the same period.
The AK therefore does not see any acute deindustrialization, but rather the need to invest in long-term location policy. A sustainable energy supply is particularly important. “A reliable and affordable energy supply through the expansion of grids and the promotion of renewable energies is crucial for the competitiveness of domestic industry,” continued Marterbauer.
Economic policy demands of the IV, AK, and IHS
Given the current economic situation, the IV is calling for targeted measures to strengthen the competitiveness of the industry. These include tax relief, more efficient bureaucracy, and increased investment in digital and technological innovations. “If we don't take countermeasures now, we won't be able to keep up with other industrial locations in the long term,” warned Helmenstein.
The AK, on the other hand, is focusing on socio-political measures and the expansion of sustainable energy sources. “Good working conditions, fair wages, and a stable energy supply are the key factors for a crisis-proof industry,” emphasized Marterbauer.
The IHS advocates a differentiated approach: on the one hand, targeted reforms are necessary to ensure the competitiveness of the industry. On the other hand, the institute emphasizes that a smart fiscal policy and targeted investments in education and infrastructure are more important in the long term than short-term subsidies.
Long-term prospects remain open.
The situation in Austrian industry remains tense, but the economic policy solutions differ. While the IV warns of a serious threat to the business location and calls for rapid economic policy measures, the AK sees the need for a sustainable energy policy and fair working conditions above all. The IHS, on the other hand, calls for caution and advocates a long-term structural policy. Whether and when the domestic industry will recover, remains uncertain. However, experts agree that it is all the more important to finally form a government that can take decisive action for the country's economic future.