The Austrian economy is projected to expand by 3.6% in 2022 and 1.4% in 2023 though Russia’s invasion of Ukraine has lowered growth prospects. The labour market is tightening, reflecting strong employment growth and rising job vacancies. Private consumption is set to be the main growth driver. Elevated uncertainty, higher energy prices, labour shortages and supply-chain disruptions are weighing on business investment and export growth. Headline inflation is expected to increase sharply to 6.7% in 2022 but ease modestly over 2023.
Austria is set to overcome the COVID-19 shock and its economic scars with the help of genuine sanitary, health and economic support policies. The country faces the opportunities and the challenges of two major structural transformations: transition to a net zero emission economy, and the generalisation of more advanced forms of digitalisation. New entries and exits in the business sector, more capital and labour re-allocations, and greater geographic mobility of labour invite new policy measures to boost social cohesion by improving the adaptation of skills to jobs, improving the social protection of free-lance workers, and accelerating the social, economic and educational integration of groups of migrant origin.
COVID-19 risks reinforcing long-standing vulnerabilities in the labour market such as digital skill gaps, diverging career trajectories between men and women, an elevated rate of long-term unemployed and subpar integration of migrants. Addressing these issues is crucial for a more inclusive recovery, facing demographic change and the sustainability of social security systems.
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2021 Structural Reform Priorities