Download Economic Report Austria 2016 · Executive Summary

Economic Report
Austria 2016
Executive Summary
www.bmwfw.gv.at
Originally published as „Wirtschaftsbericht Österreich 2016“,
http://www.bmwfw.gv.at/Wirtschaftspolitik/Wirtschaftspolitik/Seiten/Wirtschaftsbericht.aspx
Published by: Bundesministerium für Wissenschaft, Forschung und Wirtschaft (BMWFW) –
Federal Ministry of Science, Research and Economy
Stubenring 1, 1010 Vienna
Translation: Euro Text Services, Seidengasse 14/10, A-1070 Vienna
Layout: Sigma Tau Stummvoll KG, Viriotgasse 9/19, 1090 Wien, www.sigmatau.at
Vienna, June 2016
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Utilising digitisation,
improving competitiveness
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Utilising digitisation, improving competitiveness
Wirtschaftsbericht Österreich 2016
1. Utilising digitisation,
improving competitiveness
Austria‘s economy currently is on an upward trend again. The Austrian Institute of Economic Research (WIFO) expects growth rates of 1.7% in both 2016 and 2017. Boosted by the effects of the
tax reform, Austria succeeds in catching up with the euro area level again.
Economic development in Austria up to 2017
Source: Statistik Austria; forecasts of WIFO and IHS, June 2016
The global economy develops slightly better than most recently, but especially the International
Monetary Fund warns that the upswing is heterogeneous and still fragile in the different economic
areas. The persistently depressed level of investment activities recorded in the euro area suggests
that economic recovery will remain too weak without further countermeasures in the European
Union. Nevertheless, Austria will also tap its growth potential especially in foreign trade and, as a
result, further increase export market shares in the next years. After all, the number of exporters
is expected to reach a new record of around 55,000 companies in 2016. To continue on this path
and to strengthen foreign trade integration, the „go international“ promotion initiative supports
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Utilising digitisation, improving competitiveness
Wirtschaftsbericht Österreich 2016
Austrian enterprises in opening up new markets based on new products and services so that we
can profit from the growth potential of promising markets and cushion possible effects of political
and economic crises in regions of conflict. The recovery of the Austrian economy is additionally
bolstered by demand stimuli mainly resulting from the reduction of the tax burden by the wage tax
reform. The Federal Government wants to further improve the framework for entrepreneurship, for
example, by curbing bureaucracy, deregulating and supporting new companies, especially startups. Combating unemployment is a priority.
Implementing stability-oriented macro-policy
The Austrian Federal Government continues to follow its course of stability-oriented, sustainable
and growth-oriented budget and economic policy. The structural deficit adjusted for cyclical and
one-off effects decreased continuously in the past few years. In 2015, the structural balance showed a slight surplus. Austria‘s budget policy aims at maintaining its sustainable orientation. In this
context, the following actions are given priority:
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Further reduction of bureaucracy and deregulation;
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Implementation of the major tax reform 2015/2016; furthermore, non-wage labour costs of
enterprises will be gradually reduced by up to € 1 billion per year until 2018;
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Stepping up of investments for the future in order to strengthen the growth factors of Austria‘s
economy (e.g. start-up package); this also comprises the digitisation initiative and measures
addressing the labour market and employment situation;
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Continuation of structural reforms.
Supporting investments, strengthening
competitiveness
Backed by favourable financing conditions and an increasing need for replacement investments,
investments pick up again. For the first time in three years, construction investments are also expected to grow this year, which is owed to housing construction; the federal residential construction
initiatives (housing investment bank WBIB, Austrian Real Estate) will further accelerate the positive
trend of construction investments. Through WBIB, new ground is broken insofar as European funding is used for residential construction in a budget-friendly and Maastricht-neutral way.
Business investments result both in an economic stimulus and in the introduction of new technologies and processes that in their turn raise competitiveness. Therefore, it is necessary to create
a favourable investment climate not only with regard to the business cycle but also in the medium
and long term. One of the main reasons for the reluctance to invest is weak domestic demand coupled with low sales expectations in the euro area. Another restraining factor still is the financing
situation for start-up entrepreneurs. To reduce the dominance of credits in corporate financing, the
focus therefore increasingly is on alternatives, such as the equity initiatives of the public promotional agency Austria Wirtschaftsservice (aws) as well as the strengthening of crowdfunding. The
Alternative Finance Act (Alternativfinanzierungsgesetz) establishes an innovative, modern legal
framework for crowdfunding and public participation models in Austria that can serve as an example for Europe. Additionally, the public sector makes effective investments for the future, for
example, in the € 1 billion broadband initiative.
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Utilising digitisation, improving competitiveness
Wirtschaftsbericht Österreich 2016
Focusing on research and education
As international comparisons show, Austria has caught up significantly in the field of research and
innovation in the past 15 years. The R&D ratio is above 3% and, hence, markedly exceeds the EU
average of 2%. As a result, Austria records the third-highest R&D ratio of all EU countries. Further
efforts are needed to continue this successful track record. A decisive impetus is the increase of the
research premium that has already been adopted. In the next few years, a substantial challenge
will be to raise private and public R&D and promotional budgets in order to achieve the objectives
agreed in the Federal Strategy for Research, Technology and Innovation 2011 by 2020. The targeted and strategic application of open innovation is to improve significantly Austria‘s competitiveness and generate a dynamism that could not be achieved by means of traditional methods. The
international dimension also becomes more and more important in the field of research, technology
and innovation, in particular with a view to non-European countries. Therefore, the programmes
„Beyond Europe“ and „Global Incubator Network“ support Austrian enterprises in their efforts towards further internationalisation.
Gross domestic expenditure on R&D in percent of GDP
Source: Statistik Austria
Education and innovation shape the future of society and determine the lives and professional
careers of our young people. A comprehensive reform of education sectors is the sustainable response of the Federal Government to the challenges in the education and school system of today
and tomorrow. Thereby, the basic competences, talents, interests and gifts of children are to be
strengthened regardless of their social background right from the start. Within the framework of
the existing budgetary path, more pedagogical, organisational, personnel and financial leeway is
to be opened up at schools.
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Utilising digitisation, improving competitiveness
Wirtschaftsbericht Österreich 2016
Exploiting the potential of the digital shift optimally
The Digital Roadmap Austria is designed to shape optimally the digital shift in order to strengthen
Austria as a location for business and innovation and enable all people to benefit from its advantages. Digitisation already pervades all policy areas today: It plays a special role in research policy
in which specific programmes are implemented. Additionally, digitisation is relevant in numerous
other fields. „Industry 4.0“ stands for the integration of cutting-edge information and communication technologies into products and processes in manufacturing and logistics across technologies
and enterprises. This opens up great economic possibilities and new employment opportunities for
Austria as a location for industry that are promoted by targeted measures, such as pilot factories,
research programmes and endowed professorships. However, digitisation is also on the advance
in other areas – in the education sector but also in public administration, transport and healthcare. This generates potentials not only for raising efficiency but also for improving the quality of
life through smart services. At the same time, digitisation also raises challenges that need to be
addressed as quickly as possible, for instance, with a view to fair conditions of competition, data
protection and a changing world of work.
Creating incentives and stimuli for employment
With regard to the labour market, Austria had played a leading role for a long time, achieving the
lowest unemployment rate in the EU. Because of a relatively low level of economic growth and rising labour supply, the unemployment rate has also increased considerably in the past few years
– and continues to augment in contrast to the EU average so that Austria lost its place among the
top-5 Member States.
Development of unemployment rates: Euro area average and best performers
Source: Eurostat, forecast of the European Commission, May 2016
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Utilising digitisation, improving competitiveness
Wirtschaftsbericht Österreich 2016
The reduction of non-wage labour costs initiated in 2016 and the decrease of the tax rates in the
course of the tax reform provide incentives for growth and employment. It is to be expected that
corporate as well as public investments will generate stimuli for the labour market. In addition to
combating unemployment, increasing employment among older workers and women are priorities
of employment policy - in accordance with the EU-recommendations. Apart from additional funding
for active labour market policy, the focal areas of employment policy are a bonus-malus system,
easier reintegration into working life, in particular for women, based on specific services of counselling and support institutions, as well as stronger integration of people with impaired health through
targeted assistance, rehabilitation and retraining. Another key issue is integration. At least some
sectors complain about a shortage of skilled workers again and again. As a result, it is necessary
not only to improve the qualifications of the domestic workforce but also to identify existing qualifications of migrants, to upgrade them where necessary – in particular with regard to German language skills – and appropriately deploy potential workers. The Recognition Act (Anerkennungsgesetz)
made a good step in the right direction.
Making the most of opportunities
Austria‘s economic policy faces diverse challenges. At present, the debate mainly focuses on
strengthening economic growth, combating unemployment and further cutting red tape. One of
the most important topics of the future is rising digitisation. Austria has to shape the digital shift
actively in order to make the most of new opportunities. The development of innovative products
and services decisively contributes to securing prosperity in our country in the long term. An additional success factor is and will be European integration from which a strong exporting country like
Austria continues to benefit. One thing is clear: We need sensible European solutions for transnational challenges. However difficult they may be, there is no way around it.
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Federal Ministry of Science, Research and Economy
1010 Vienna | Stubenring 1 | www.bmwfw.gv.at