Country Risk Rating

The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behavior. Corporate default probability is very low on average. - Source: Coface

Business Climate Rating

The business environment is very good. Corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transactions run smoothly in environments rated A1.


  • Central location in Europe and attractive quality of life
  • Industrial and tertiary diversification, high added value 
  • Solid current account surplus and low public deficit
  • Low level of household and company debt, below the European average
  • High level of employment and low youth unemployment (use of apprenticeships and flexicurity)
  • 30% of energy sourced from renewable supplies
  • Major tourist destination (11th in the world)
  • High level of public R&D investment (3% of GDP)


  • Reliance on the state of German and Central and East European economies
  • Banking sector with high exposure to Central and Eastern and South-east European countries
  • Multiple layers of power and administration (federal, Länder, communes)
  • Lack of competitiveness of public services and numbers of regulated professions 

Current Trends

Continued Strong Growth in 2018

Strong household consumption, as well as external demand, will once again drive growth in 2018. Household confidence will be boosted by the falling unemployment rate, in particular among women and older workers, and rising real wages. Job creation, most notably in the digital field, will be rapid in order to meet the needs of companies in terms of production and technological progress. The construction and real estate sectors will benefit from the increasing demand due to immigration and refugees. At the same time, sustained foreign trade will add 0.8 points to overall growth. Manufacturing industry (20.8% of GDP), highly export-oriented and integrated into the German value creation chain, will be boosted by the growth in demand in the Central European and emerging countries. This momentum is expected to continue stimulating investment (23.1% of GDP in 2016) by Austrian companies in capital equipment, which achieved a utilization rate of 86.9% at the end of 2017. The services sector will also grow, with the hotel, catering and retail sectors benefiting from the economic situation in German, from where almost 50% of foreign tourists come.

Inflation will remain above the European average because of the price levels in the services (particularly tourism), industrial goods, and agri-food sectors.

Gradual Reduction of Public Debt and Structural Current Account Surplus

The public finances will benefit from the favorable economic situation and the deficit will be held at the government’s target level (around 1% of GDP). The high levels of employment mean strong tax revenues, in particular, income taxes and social security contributions. Revenues raised by VAT are also likely to increase, boosted by household consumption. On the other hand, receipts from the tax on production will decline as a result of cuts in employers’ contributions to the Familienlastenausgleichsfond (family allowance fund). The increase in public spending will continue to hold in check. The measures approved in 2017, include increases in certain subsidies such as the reimbursement of 50% of employer social security contributions over the first three years following the hiring of a new employee. The cutting of financial support for refugees, the fall in the already very low cost of State debt and the reduction in spending linked with unemployment will help, partly, offset this increase. The debt will continue to shrink in 2018 with the sights set on achieving convergence with the European rate of 60%, which should be completed in ten years. The cost of the measures to support the banking sector, which was significant until 2015, will continue at a low level. Following the banking rescue operation completed in October 2016, with the restructuring of the debt held by HETA, the banking sector continued its weak recovery in 2017, reflecting increasingly strict requirements in terms of capital reserves and asset quality. Bank profitability is expected to improve in 2018, benefiting from the growth in demand for finance from companies and mortgage credit from households.

The current account surplus arises thanks to the surplus earned by services (3% of GDP in 2016), in particular, those relating to tourism (31% of all services). The trade balance, slightly in the black in recent years, could shift into the red under the pressure of strong domestic demand. Exports and imports are concentrated in the same sectors (machines, transport equipment, chemical products, and manufactured goods). The deficit (2.2%) in the income balance will remain because of immigrant workers’ remittances and the repatriation of dividends by foreign-owned companies.

Payment behavior remains good. The number of insolvencies, already low, continued to fall in 2017 (-6.6% in the first three quarters) and company liabilities were down 54% over the same period. The sectors with the greatest exposure are construction, machines, and metallurgy.

A Coalition of the Right and Far-Right 

The ÖVP, Christian-Democrat and conservative, won the 15th October 2017 parliamentary elections, for which there was a high turnout (80%). The ÖVP won 62 of the 182 seats in the Nationalrat, ahead of both the social-democrats of the SPÖ and the far-right FPÖ party (respectively 52 and 51 seats). Sebastian Kurz, 31, the leader of the ÖVP and Foreign Minister since 2013, was appointed Chancellor by the President, Alexander Van der Bellen, with the aim of forming a government. The next coalition will apparently be formed by the ÖVP and the FPÖ. This means the end of the ten-year-long rule by the ÖVP-SPÖ coalition. The government’s position with regard to the EU remains to be seen, bearing in mind the pro-European commitment of the ÖVP, which is the majority coalition partner, and the nationalist stance of the FPÖ. The terms obtained by this latter in joining the government include securing the borders, direct democracy and more restrictive policies relating to refugees. The modernization of the civil service, investments in R&D and digitization will be among the government’s priorities.


Coface (01/2018)