Leslie Massey
Austria's economy is diversified and highly international, with a large service sector and a strong industrial sector. The country is known for its high purchasing power, stable infrastructure, and strong population growth. Austria's economy is closely tied to other EU economies, particularly Germany, its largest trading partner. The country has a high proportion of small and medium-sized enterprises (SMEs), which make up 99.6% of all companies in Austria. The most significant industries in Austria include construction, electronics, tourism, food and drinks, logistics and transportation, and automotive and chemical industries.
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Food and drinks
Austria's food and drinks industry is a crucial and growing sector of the country's economy, contributing 12% to the economy and employing over 27,000 people. The industry consists of 3,500 companies, alongside 670 firms involved in producing beverages. In 2021, the Austrian food sector saw a 6% overall revenue increase, while beverage production increased by 14%.
The major segments within the food and drinks industries include food-processing sectors such as slaughterhouses and dairy farms; agriculture, and food trade. Additionally, there are brewing companies, non-alcoholic beverage firms, and gastronomy services.
Austrian groceries are popular globally, and the country has both modern and traditional resources for handling food production. Innovative manufacturing processes, combined with international agricultural trade, help create a wide range of food and drinks. The country is also a leading producer of natural magnesite, a magnesium carbonate used in the chemical industry, which is significant for industrial exploitation.
Austria exports food and soft drinks to 180 countries, and one in six jobs is dependent on the sector. Specialised products include cheeses, jams, cured meat products, chocolate confectionery, fruit juices, and ice teas. The country also has over 9,000 small wine-growing businesses, benefiting from Austria's rich soils and wide variety of grapes.
The food tech sector in Austria is also growing, with startups developing new ingredients and products for the food industry. Many of these focus on sustainability and creating healthy alternatives to conventional foods.
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Tourism
Austria's tourism industry is heavily dominated by small, family-run businesses, which offer warm and impeccable hospitality. The country's appeal extends to travellers from all walks of life, from its classy capital city of Vienna to its picturesque Alpine towns and epic mountain landscapes. Vienna attracted nearly six million visitors from abroad in 2023, roughly twice as many as all the other Austrian state capitals combined. Other popular destinations include Salzburg, the birthplace of Mozart, and Innsbruck, which is popular among skiers and hikers.
Austria's majestic Alps, beautiful rivers and lakes with drinking water quality, lovely cities, rich history, central location in the heart of Europe, and culinary art all contribute to its appeal as a tourist destination. The country also has one of the largest natural land reserves in Central Europe, with 695 mountain peaks higher than 3,000 metres, 6 national parks, 48 nature parks, and around 600 mountain huts.
Austria's tourism industry is also boosted by its world-famous arts and crafts, including fine handcrafted items, customised jewellery, ceramics, and glassware. The country's excellent gastronomy, including its high-quality food and drinks, is another draw for tourists. The food and drinks industry in Austria employs over 27,000 people and contributes 12% to the economy.
The growth of the tourism industry in Austria has had a positive impact on the country's infrastructure and real estate sectors. The increase in the number of tourists has led to the development of numerous convention hotels, exhibition halls, and special event locations, as well as the expansion of transportation networks and infrastructure projects such as highway repairs, road lane doubling, and railway construction. As a result, real estate prices in Austria have also been increasing, with a 6.8% year-on-year increase in 2018, according to the Austrian National Bank.
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Manufacturing
Austria's manufacturing sector is dominated by small and medium-sized enterprises (SMEs), which make up 99.6% of all companies in the country. These SMEs are highly specialized and complex, contributing to Austria's ranking as 10th in the world in terms of economic complexity. In 2017, 98% of Austria's manufacturers were SMEs, and many operate in a dynamic startup environment that has gained recognition on Forbes' European startup hotspot list. The success of these SMEs can be attributed to various factors, including a highly skilled labour force, a strong focus on manufacturing and production, and robust in-house research and innovation capabilities.
Austria's manufacturing industry covers a diverse range of physical goods and industries, including food and beverage production, textiles, chemical manufacturing, metalworking, and electronics manufacturing. The food and beverage industry is particularly notable, with Austrian groceries enjoying high popularity globally due to their innovative manufacturing processes and high-quality resources. The country's automotive sector is also renowned, with Austrian components being used in vehicles worldwide.
The manufacturing market in Austria is expected to grow at an annual rate of 2.89% from 2023 to 2028, resulting in a market volume of US$77.33 billion in 2028. This growth is influenced by several factors, including rising global demand, technological advancements, and increasing investment in automation and digitalization. The importance of manufacturing in Austria is further emphasized by its contribution to employment, technological innovation, and international trade.
Austria's manufacturers benefit from their ability to export, with exports rising 8.23% in 2017, driven largely by trade with other European Union countries and the United States. The country's membership in the EU has also attracted foreign investors, providing access to the European Single Market and proximity to aspiring EU economies. Overall, Austria's manufacturing sector is characterized by its focus on niche markets, innovation, and a highly skilled workforce, contributing significantly to the country's economic growth and global competitiveness.
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Construction
Austria's construction industry is closely linked to its manufacturing sector, which makes up nearly 20% of the country's GDP. The manufacturing sector includes a wide range of industries, such as engineering, transportation, and the production of basic goods and highly processed products. The country has a strong presence of small and medium-sized enterprises (SMEs), which make up 99.6% of all companies in Austria. These SMEs are often highly specialized and innovative, contributing to the economic complexity and growth of the country.
The construction industry in Austria is also influenced by the country's strong labour movement. The Austrian Trade Union Federation (ÖGB) plays a significant role in wage policies and social and economic issues, promoting a peaceful social climate. Additionally, Austria's membership in the European Union has attracted foreign investors, particularly in sectors that require advanced technology and capital-intensive industries.
The construction sector in Austria is expected to continue growing due to its stable infrastructure, skilled labour force, and business-friendly environment. The country's economic stability, high purchasing power, and low living costs make it an attractive location for businesses and research, further contributing to the growth of the construction industry.
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Finance and consulting
Austria's economy is largely driven by small and medium-sized enterprises (SMEs), which make up 99.6% of all companies in the country. The country's economy is also heavily reliant on exports, with over 50% of its GDP derived from this. Austria's largest trading partner is Germany, but it has diversified its economic portfolio since becoming a member state of the European Union. This has resulted in an influx of foreign investors, attracted by the country's access to the European Single Market and proximity to aspiring Central and Eastern European economies.
The service sector is the most important for Austria, generating the majority of the country's GDP. Within this sector, sales, hotel and restaurant services, and health and education are the largest employers. The financial sector is also a significant contributor to the economy, with many Viennese banks and law firms leading the way in business with new EU member states. The country's location between Western Europe and higher-growth markets in Central, Eastern, and Southeastern Europe has made it attractive to foreign investors, particularly in the automotive, pharmaceutical, ICT, electronics, and financial sectors.
The consulting industry in Austria is experiencing high and continuous growth of nearly 7% per annum. With over 7,500 employers and more than 70,000 employees, it is an industry of the future, pioneering innovation and further employment. One particular growth area within consulting is information and data security. Global management consulting firms such as Oliver Wyman and Bain & Company have a presence in the country.
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Frequently asked questions
The most significant industries in Austria include construction and building, electronics and electrics, tourism, food and drinks, logistics and transportation, automotive and chemical industries, as well as steel and mechanical engineering.
The Austrian economy is dominated by the service sector, which generates the vast majority of Austria's GDP. About 70% of the gross value added (GVA) comes from the tertiary sector, while only 1.2% comes from the primary sector, which includes agriculture and forestry.
The electronics and food industries in Austria have been experiencing significant growth. The electronics industry has an export ratio of over 69.7%, while the food industry contributes 12% to the country's economy. Additionally, the logistics and transportation sector is booming, with growth in employment and productivity.
Austria has a high proportion of small and medium-sized enterprises (SMEs), which are often referred to as "hidden champions". These SMEs contribute significantly to the economy, with a strong focus on manufacturing and production, in-house research, and innovation. Together with Germany and Switzerland, Austria has the world's highest concentration of SMEs that are global market leaders in their respective industries.
Austria's membership in the European Union has reduced its economic dependence on Germany and attracted foreign investors. Austria is also increasingly becoming an international meeting point, hosting many summits and conferences. Additionally, the country's relevance as a transit hub for European energy supplies, including hydroelectric power, petroleum, natural gas, and electricity, is growing.
