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- GDP (PPP):
- $395.5 billion
- 0.3% growth
- 1.3% 5-year compound annual growth
- $46,420 per capita
- Inflation (CPI):
- FDI Inflow:
Austria’s highly developed and resilient economy sustains high levels of prosperity. Openness to global trade and investment is firmly institutionalized and supported by a relatively efficient entrepreneurial framework. Austria has a strong tradition of reliable protection of property rights, and the legal system is transparent and evenly applied. Effective anti-corruption measures are in force.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 71.7 (up 0.5 point)
- Economic Freedom Status: Mostly Free
- Global Ranking: 28th
- Regional Ranking: 15th in Europe
- Notable Successes: Rule of Law, Regulatory Efficiency, and Open Markets
- Concerns: Fiscal Freedom and Government Spending
- Overall Score Change Since 2012: +1.4
Though the corporate tax rate is comparatively low, high social security contributions and personal income tax rates discourage labor force participation and undermine dynamic growth. The overall tax burden remains quite high, and public spending accounts for about half of GDP. Reforms to increase labor market flexibility and competition in the services sector remain critical.
The center-left Social Democratic Party and center-right Austrian People’s Party coalition, led by Social Democrat Chancellor Werner Faymann, lost seats in September 2013 but retained a governing majority. Eurosceptic parties made gains. Austria’s economy has been relatively resilient through the eurozone crisis, outperforming many other EU economies. Austria still boasts one of the world’s highest GDPs per capita, but recent overall GDP growth has been modest. Government debt is growing. The government has gradually relinquished control of formerly nationalized oil, gas, steel, and engineering companies and has deregulated telecommunications and electricity. Austria has large service and industrial sectors and a small, highly developed agricultural sector.
A 2014 EU anti-corruption report said the government had increased its prevention and prosecution efforts against corruption, which is relatively rare and widely reported in the media. The independent judiciary provides effective protection for the property and contractual rights of nationals and foreigners. The land registry is a reliable and publicly accessible system for recording interests in property.
The top income tax rate is 50 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax and a tax on real estate transfers. High social security contributions are shared between employers and employees. The overall tax burden equals 42.5 percent of total domestic income. Government spending continues to account for over half of total domestic output, and public debt equals approximately 87 percent of GDP.
An efficient regulatory framework facilitates innovation, although the absence of major reforms has undermined international competitiveness. There is no nationally mandated minimum wage, but the cost of fringe benefits is very high. Although state-owned VERBUND is Austria’s largest electricity provider, the government sparked tensions with the United Kingdom in 2015 by opposing EU subsidies for an Anglo–French nuclear power plant.
The EU has a low 1 percent average tariff rate, and most member countries have relatively low non-tariff barriers. Austria screens investments in some strategic sectors, but its overall trade and foreign investment climate is one of the most open in the world. There are no controls on currency transfers or repatriation of profits. The competitive financial sector continues to offer a wide range of financial services.