Austria: country overview

17 May 2012
by Ina Dimireva -- last modified 12 February 2013

Austria, with its well-developed market economy and high standard of living, is closely tied to other EU economies, especially Germany's. Its economy features a large service sector, a sound industrial sector, and a small, but highly developed agricultural sector.

Austria

Year of EU entry: 1995

Member of Schengen area:Yes

Political system: Federal republic

Capital city: Vienna

Total area: 83 870 km²

Population: 8.3 million

Currency: euro

Listen to the official EU language: German

Economy Overview

Map of Austria Austria, with its well-developed market economy, skilled labour force, and high standard of living, is closely tied to other EU economies, especially Germany's.

Its economy features a large service sector, a sound industrial sector, and a small, but highly developed agricultural sector. Following several years of solid foreign demand for Austrian exports and record employment growth, the international financial crisis of 2008 and subsequent global economic downturn led to a sharp but brief recession.

Austrian GDP contracted 3.8% in 2009 but saw positive growth of about 2% in 2010 and 2.7% in 2011. Growth fell below 1% in 2012. Unemployment did not rise as steeply in Austria as elsewhere in Europe, partly because the government subsidized reduced working hour schemes to allow companies to retain employees. Stabilization measures, stimulus spending, and an income tax reform pushed the budget deficit to 4.5% in 2010 and 2.6% in 2011, from only about 0.9% in 2008.

The international financial crisis of 2008 caused difficulties for Austria's largest banks whose extensive operations in central, eastern, and south-eastern Europe faced large losses. The government provided bank support - including in some instances, nationalization - to support aggregate demand and stabilize the banking system. Austria's fiscal position compares favourably with other euro-zone countries, but it faces considerable external risks, such as Austrian banks' continued high exposure to central and eastern Europe as well as political and economic uncertainties caused by the European sovereign debt crisis.

In 2011 the government attempted to pass a constitutional amendment limiting public debt to 60% of GDP by 2020, but it was unable to obtain sufficient support in parliament and instead passed the measure as a simple law. In March 2012, the Austrian parliament approved an austerity budget that will bring public finances into balance by 2016. In 2012, the budget deficit rose to 2.9% of GDP.

General

The Alps dominate the western and southern parts of Austria while the eastern provinces - including Vienna, the capital - lie in the Danube basin.

Until the end of World War I, Austria had been the centre of a vast empire, which controlled much of central Europe for centuries. Austria is now a federal republic, consisting of nine states.

Vienna hosts a number of international organisations, including the Secretariat of the Organisation for Security and Cooperation in Europe, the International Atomic Energy Agency and the Organisation of Petroleum Exporting Countries.

The Austrian Parliament has two chambers. The National Council, or Nationalrat , has 183 members, who are elected by direct popular vote to serve a five-year term. The Federal Council, or Bundesrat , is the upper house with about 62 members who represent each province. Its members serve a four or six-year term.

Austria has a rich cultural heritage. Wolfgang Amadeus Mozart occupies a place of his own as a composer, while the music of Franz Schubert also enjoys great popularity. In the world of philosophy and ideas, the work of Siegmund Freud continues to provoke controversy, while Ludwig Wittgenstein was one of the major influences in 20th century philosophical thinking. In art, the paintings of Gustav Klimt from the late 1800s are widely admired.

Austria has a mixed industrial and agricultural economy, while tourism is also an important source of income.

In cuisine, Austrian specialities such as Wiener Schnitzel and Apfelstrudel have become international dishes which need no translation.