Austria’s Economy Shrinks as Construction and Retail Decline

Austria’s Economy Shrinks as Construction and Retail Decline

APA/THEMENBILD/HARALD SCHNEIDER

 

Austria’s economy shrank more sharply than expected in 2023, according to new data from Statistik Austria.

“The construction industry and retail sector saw the biggest declines,” said Tobias Thomas, Director-General of Statistik Austria. “The service sector, however, showed the greatest resilience, contracting by just 0.6% despite the challenging economic environment.”

The country’s Gross Domestic Product (GDP), adjusted for inflation, fell by 1% in 2023, compared to the 0.8% previously forecast. However, in nominal terms, the economy grew by 5.6% to €473.2 billion, or €51,830 per person.

The manufacturing sector recorded a 1.8% drop in output, with construction taking a heavy hit, down 7.5%. Across the broader production sector, which includes both heavy industry and construction, the overall decline was 2.4%. Retail trade also struggled, showing a 5.7% decrease.

In addition, housing investment dropped by 11.9%, building construction by 7.6%, and civil engineering by 2.4%. Imports fell by 4.6%, while exports slipped by just 0.4%.

On a more positive note, services, particularly in accommodation and food, grew by 5.4%, while the arts, entertainment, and recreation sectors expanded by 5.1%. Employment and working hours rose by 1.4%, and wages increased by 8.8%, driven by higher wage agreements. Government and non-profit organisations increased their spending by 1.2% and 5.8% respectively, but private household consumption fell by 0.7%.

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