Austria’s economy shrank by 1.1 per cent in real terms in 2024, it was was announced on March 3 by the country’s federal statistical bureau Statistik Austria.
While the rate of contraction slowed a bit in the fourth quarter – with economic activity down by 0.5 per cent compared to the fourth quarter in 2023 – the total loss in Gross Domestic Product (GDP) far surpassed expectations.
The two main economic research institutes in Austria had both expected a contraction of only 0.9 per cent in their most recent prognoses.
Österreich steckt weiter in der #Rezession, die nun bereits zwei Jahre andauert. Zu Jahresende 2024 hat die #Wirtschaftsleistung nochmals nachgelassen, wenn auch nicht mehr kräftig wie zuvor.
➡ https://t.co/HITl8GtThc #BIP pic.twitter.com/DoHIKEfvG6— Statistik Austria (@STATISTIK_AT) March 3, 2025
The poor figures meant that Austria has now been in a recession for two years in a row. In 2023, the country’s GDP per capita had shrunk by 0.8 per cent.
On March 3, the director general of Statistik Austria Tobias Thomas said it the current slump was the longest recession since the start of the calculations in 1995.
“Almost all sectors of the economy are doing badly, especially goods production, restaurants and hotels,” he continued.
The production of goods shrank by 5.5 per cent in 2024 compared to 2023, construction contracted by 4.4 per cent and the hospitality industry was down by 3.9 per cent.
Investments and exports also crashed by 3.4 and 4.3 per cent, respectively. Growth was primarily registered in public administration, healthcare and education.
GDP per capita was now more than 3 per cent below the levels before the onset of Covid – which Austria had tried to counter with some of the most draconian measures in Europe. That crippled the economy and burdened the State with tens of billions of euro in new debt for subsidies.
Now, inflation has picked up again. In February, according to Statistik Austria estimates, it rose to 3.3 per cent – well above the 2 per cent target set by the European Central Bank.
Austria has been at the bottom of the league for growth among European Union countries for a considerable time.
In November 2024, calculations by Vienna-based think-tank Agenda Austria showed Austrian GDP per capita was set to grow by only 0.5 per cent from 2019 to 2026 – ahead of only Germany (0.0 per cent) and Luxembourg (-0.2 per cent).
Meanwhile, neighbouring countries were expected to do much better. Italy’s GDP per capita was set to grow by 10 per cent by 2026 compared to 2019, with Hungary’s possibly up by 14 per cent.
Whether the new Austrian government – which comprises Conservatives and Social Democrats but whose programme has been called “the most left-wing ever” – can get the country back on a path to growth remains to be seen.
Its industry sector is suffering from high energy prices and a heavy tax burden from labour costs and overregulation, with that not expected to be addressed anytime soon.
Instead, the incoming administration said it planned to raise taxes, increase subsidies and generally expand State interventions in the economy even more.
