The economy of Austria is a developed social market economy, with the country being one of the fourteen richest in the world in terms of GDP (gross domestic product) per capita. Until the 1980s, many of Austria's largest industry firms were nationalised. In recent years, privatisation has reduced state holdings to a level comparable to other European economies.
Labour movements are particularly strong in Austria, and they have a large influence on labour politics. Next to a highly developed industry, international tourism is the most important part of the national economy. The economy of Austria's average GDP is 13th growth in OECD countries, from 1992 to 2017. In Austria, 1.37% over average population growth is the strong factor.
Germany has historically been the main trading partner of Austria, making the Austrian economy vulnerable to rapid changes in the German economy. However, since Austria became a member state of the European Union, it has gained closer ties to other European Union economies. This development reduced its economic dependence on Germany. In addition, Austria's membership in the EU has drawn an influx of foreign investors.
They were attracted by Austria's access to the European Single Market and the country's proximity to the aspiring economies of the European Union. Growth in GDP has accelerated in recent years, and reached 3.3% in 2006.
In 2023 Austria has a very high, $56,802 nominal GDP per capita ranked 12th.
Vienna was ranked the fifth richest NUTS-2 region within Europe (see Economy of the European Union), with its GDP reaching €38,632 per capita. It was trailing behind Inner London, Luxembourg, the Brussels-Capital Region and Hamburg.
Growth had been steady between 2002 and 2006, varying between 1 and 3.3%. After hitting 0% in 2013, growth had picked up a little. As of 2016, growth was set at 1.5%.
History
Foundation and Interbellum
First Austrian Republic, founded as a result of the dissolution of Austria-Hungary, inherited an economy battered by the ravages of the First World War, namely:
The abolition of the gold standard in 1914. Provision by the central bank of credit to the state, increasing the money supply. The balance-of-payments deficit caused by the Austrian need to import food and fuel, devaluing the krone (the Austrian currency at the time). The use of deficit spending to finance food subsidies, leading to a 12-fold increase of banknotes in circulation.
A number of international relief schemes failed to garner enough support while a report by Sir William Goode argued that the Austrian economy would collapse without swift foreign intervention. As such, the Austrian economic crisis stretched into its second year, with inflation running at 99%.
League of Nations Bailout
With annual inflation running at 2,877%, the League of Nations was officially appointed to organise an Austrian reconstruction plan in August 1922. The League scheme was based on the view that Austrian troubles as a result of an inability to pay for necessities and obtain credit, and therefore, an Austrian financial revival was critical to Austrian survival. To this end, the plan was focused solely on financial reconstruction. Austria would receive loans raised from international money markets and the Austrian public, which would be secured on customs and tobacco taxes. In exchange, Austria would in effect lose sovereignty over its economy, agreeing to:
Relinquish control over the mints to an independent bank, with the aim of returning to the gold standard. Terminate the printing of money by the central bank. Eliminate the budget deficit (requiring the implementation of austerity measures and monetary control).
The measures took effect in 1923. Short-term effects were impressive; during the announcement to undertake Austrian reconstruction in August 1922, public confidence soared. Foreign currency holdings were converted back into krone, stabilising the currency. This allowed the Austrian Foreign Exchange Agency to finally intervene to fix the krone to the dollar, something that the wild gyrations of the past had not permitted. Capital rushed back into Austria, and domestic prices stabilised, pronouncing the end of hyperinflation.
The steam ran out shortly after implementation. Growth averaged 0.35% per annum until 1929, unemployment leapt five-fold, bankruptcies increased 41-fold, and the trade deficit doubled.
Anschluss
Austria was annexed by Nazi Germany in 1938, and consequently lost control of its own economic policy until the formation of the Second Republic in 1945.