Brief analysis 25: Austria’s competitiveness declining
Eco Austria Competitiveness Index in the fourth quarter of 2022:
Update of the ECI
In a new brief analysis, EcoAustria has examined the development of Austria's competitiveness in comparison to other EU countries. The current results of the EcoAustria Competitiveness Index (ECI) currently show a downward trend in domestic competitiveness. In the fourth quarter of 2022, the value of the index deteriorated further from 104.8 to 104.3, putting Austria in 14th place out of a total of 30 economic areas analyzed.
Figure: ECI results for the fourth quarter of 2022
This decline is due in particular to a deterioration in net exports. While these still accounted for 2.8% of GDP in the third quarter of 2022, they only made up 1.5% in the fourth quarter. Irrespective of the latest development, it should generally be noted that Austria's net exports have been trending negatively for some time.
The increase in gross fixed capital formation in the fourth quarter of 2022 is having a positive effect on competitiveness. This rose moderately from 25.3% in the third quarter to 25.5% of GDP in the fourth quarter. At the same time, however, it should be noted in the European comparative framework that fixed asset investments have developed faster and more dynamically than in Austria in many of the countries compared, particularly in the new EU member states since 2004 (NMS).
The third variable of the ECI, real labor productivity, decreased by almost one percentage point in the fourth quarter of 2022 compared to the previous quarter (106.4). Although this puts Austria just above the comparative values of the EU-27 member states (104.9), the eurozone (103.6) or Germany (104), the new EU member states in particular have significantly faster productivity growth.
In summary, it can be said that Austria's competitiveness has recently deteriorated. There is potential to catch up, especially in comparison to the top performers and more dynamic economic areas such as the new EU member states. A balanced policy mix and the promotion of systemic incentives, for example in the innovation system or in social security systems, are needed to improve the framework conditions. In view of the current uncertainties - such as energy and input prices, a shortage of skilled workers or economic uncertainties - companies need the most stable framework conditions and reliable prospects from politicians, as EcoAustria expert Nikolaus Graf explains: "In the energy sector, the expansion of renewable energy infrastructures, the integration of the European energy market and accelerated approval procedures for energy generation plants can help to strengthen competitiveness."
