major macro economic indicators
|2017||2018||2019 (e)||2020 (f)|
|GDP growth (%)||2.5||2.4||1.6||1.4|
|Inflation (yearly average, %)||2.2||2.1||1.4||1.6|
|Budget balance (% GDP)||-0.7||0.2||0.4||0.2|
|Current account balance (% GDP)||1.7||2.4||2.0||2.0|
|Public debt (% GDP)||78.3||74.0||70.8||68.1|
(e): Estimate. (f): Forecast.
- Industrial and tertiary diversification; high added value
- Comfortable current account surplus and balanced government budget
- More than 30% of energy sourced from renewable supplies
- Major tourist destination (11th in the world)
- High public expenditure on R&D (3% of GDP)
- Dependent on the German and Central/Eastern European economies
- Banking sector exposed to Central, Eastern, and South-Eastern European countries
- Multiple layers of power and administration (federation, Länder, municipalities)
Growth weakened by the external environment
Austrian economic growth is expected to slow slightly in 2020. Household consumption (52% of GDP) remains a growth driver, supported by fiscal measures (including a number of tax cuts). Its acceleration was already perceived last year with decreasing unemployment, growing wages and from a tax cut for families (Familienbonus, or “the family bonus”). However, last year’s surge in construction is not likely to be extended to 2020. Although favourable financing conditions still support demand for housing, fixed asset investment (24% of GDP) will slow down amid lower economic growth.
On the industrial side, the weakness of the main trading partner, Germany, and slower global demand result in a deteriorated business sentiment with purchasing managers’ index (PMI) dropping to its lowest level in seven years in September 2019. The slowdown has already affected manufacturing industries, including automotive and sectors closely cooperating with it, i.e. machinery, chemicals and metals. Therefore, exports growth will be under pressure. However, Austria’s links to Central and Eastern Europe could partly compensate the negative effects of the global slowdown, as the CEE region still enjoys a relatively solid economic activity. Nevertheless, as slower investments will also limit growth of imports, the net external balance contribution to GDP growth should remain positive.
The labour market remains favourable for households. The unemployment rate has continued to fall, reaching 4.5% in September 2019. As there is not much room for its further contraction, it is expected to stabilize in 2020. However, companies still report sizeable job vacancies, which are some of the highest in the European Union (the vacancy rate reached 3.0% in mid-2019 compared to 2.3% for the EU average). The tightness of the labour market is likely to ease in the course of 2020, in line with weaker demand for labour linked to decelerating economic activity.
Tiny budget surplus and decreasing public debt
The budget deficit is expected to show a tiny surplus this year. Admittedly, the wage tax and assessed income tax will be not as strong as last year facing weaker employment growth. Furthermore, a series of fiscal measures implemented last year will take a toll on budget figures in 2020. Therefore, the 2020 budget surplus is going to be lower but supported by taxes on the digital economy and measures against tax fraud. The public debt will continue its downward path.
The current account surplus decreased slightly in 2019 because of slower growth of exports. Weaker foreign trade is likely to be perceived in 2020. However, the current account will be still supported by tourism revenues. Imports and exports alike will remain concentrated in the same sectors, namely machinery, transport and chemicals. Income from Austrian investments abroad will balance profit remittances from foreign investments. As usual, the current account surplus will be absorbed by foreign investments, especially portfolio investments.
Coalition government of ÖVP and Greens
The Austrian People’s Party (ÖVP) – the conservative, Christian democrat party – won the October 2017 parliamentary elections with more than a third of the seats in the Nationalrat (Lower house). President Alexander Van der Bellen appointed Sebastian Kurz, former Minister of Foreign Affairs and leader of the ÖVP, as Chancellor. The coalition government consisted of the ÖVP and the far-right Freedom Party of Austria (FPÖ). However, Kurz’s government was ousted in a no-confidence vote after the Freedom Party’s leader, Heinz-Christian Strache, resigned as Vice Chancellor in May 2019, after the emergence of a video that showed him promising government contracts in exchange for financial support from a woman claiming to be a wealthy Russian. In the snap election held in September 2019, the ÖVP emerged again as the largest party. It began coalition negotiations with the Greens, who finished fourth in the latest election. In January 2020 the ÖVP and the Greens reached a deal to form a coalition government. Mr Kurz remained Chancellor. The new coalition of widely disparate parties is likely to compromise, especially on immigration and climate. Mr Kurz’s coalition options were limited given the withdrawal from preliminary talks of the two larger opposition parties, the Social Democratic Party (SPÖ) and the FPÖ, as well as the support for an ÖVP-Green partnership among the ÖVP regional governors, who exert significant influence within the party.
Last update : February 2020
SWIFT and SEPA (within the EU) transfers are commonly used for domestic and international transactions and offer a cost-effective, quick, and secure means of payment.
Bills of exchange and, to a lesser degree, cheques are most commonly used as a means of financing or payment guarantee. Nevertheless, neither are widely used nor recommended, as they are not always the most effective means of payment., bills of exchange must meet relatively restrictive mandatory criteria to be valid, which deters business people from using them. In parallel, cheques need not be backed by funds at the date of issue, but must be covered at the date of presentation. Banks normally return bad cheques to their issuers, who may also stop payment on their own without fear of criminal proceedings for misuse of this facility.
As a rule, the collection process begins with the debtor being sent a demand for payment by registered mail, reminding him of his obligation to pay the outstanding sum plus any default interest stipulated in the sales agreement or terms of sale.
Where there is no interest rate clause in the agreement, the rate of interest applicable semi-annually from August 1, 2002 is the Bank of Austria’s base rate, calculated by reference to the European Central Bank’s refinancing rate, marked up by eight percentage points.
For claims that are certain, liquid and uncontested, creditors may seek a fast-track court injunction (Mahnverfahren) from the district court via a pre-printed form. The competent district court for this type of fast-tract procedure expedites the requisite action for ordinary claims up to EUR 75,000 (previously EUR 30,000).
With this procedure, the judge will issue an injunction to pay the amount claimed plus the legal costs incurred. If the debtor does not appeal the injunction (Einspruch) within four weeks of service of the ruling, the order is enforceable relatively quickly.
A special procedure (Wechselmandatsverfahren) exists for unpaid bills of exchange under which the court immediately serves a writ ordering the debtor to settle within two weeks. However, should the debtor contest the claim, the case will be tried through the normal channels of court proceedings.
If the debtor has assets in other EU countries, the creditor may request the Vienna Commercial Court to issue a European Payment Order for undisputed debts, enforceable in all EU countries (except Denmark).
Where no settlement can be reached, or where a claim is contested, the last remaining alternative is to file an ordinary action (Klage) before the district court (Bezirksgericht) or the regional court (Landesgericht) depending on the claim amount or type of dispute. Defendants have four weeks to file their own arguments.
With regards to the regional courts, defendants are expected to put forward their own arguments in response to the summons, and are allowed four weeks to do so.
A separate commercial court (Handelsgericht) exists in the district of Vienna alone to hear commercial cases (commercial disputes, unfair competition lawsuits, insolvency petitions, etc.).
During the preliminary stage of proceedings, the parties must make written submissions of evidence and file their respective claims. The court then decides on the facts of the case presented to it, but does not investigate cases on its own initiative. At the main hearing, the judge examines the written evidence submitted and hears the parties’ arguments as well as witnesses’ testimonies. An enforcement order can usually be obtained in the first instance within about ten to twelve months. The Civil Procedure Code provides that the winning party at issue of the lawsuit is entitled to receive full compensation from the losing party of all necessary legal fees previously incurred.
Enforcement of a legal decision
A judgement becomes enforceable when it becomes final. If the debtor does not respect the court’s judgement, the court can issue an attachment order or a garnishment order. Alternatively, the court can seize and sell the debtor’s assets.
For foreign awards, circumstances may vary depending on the issuing country. For EU countries, the two main methods of enforcing an EU judgment are the European Enforcement Order or under the provisions of the Brussels I regulations. For non-EU countries, judgments are recognized and enforced provided that the issuing country is party to an international agreement with Austria.
Out-of Court proceedings
Out-of court restructuring efforts and negotiations are usually antecedent to insolvency proceedings. They constitute a means to obtain recapitalization loans in exchange for a secured creditor status.
A pre-requisite for a restructuring proceeding is that the debtor files for the opening and at the same time submits a restructuring plan. This proceeding is either self-administrated or administrated by an administration. For self-administrated restructuring, the debtor must file an application of self-administration complemented by qualified documents and a restructuring plan that provides a minimum quota of 30%.
Liquidation proceedings aim to equitably realise the various creditors’ rights. The proceedings are led by a trustee in bankruptcy which takes control of the business, sells the assets, and divides the proceeds among the creditors.
Retention of title
Similar to Germany, Retention of Title is a written clause in a contract, which states that the supplier will retain the ownership over the delivered goods until the buyer made full payment of the price. This usually takes one of three forms:
- simple retention: the supplier will retain the ownership over the goods supplied until full payment is made by the buyer;
- expanded retention: the retention is expanded to further sale of the subsequent goods; the buyer will assign the claims issued from the resale to a third party to the initial supplier;
- extended retention: the retention is extended to the goods processed into a new product, and the initial supplier remains the owner or the co‑owner up to the value of its delivery.