Policy Note 63: Export potential in times of geopolitical uncertainty

Austria's foreign trade is a key driver of economic growth. However, this engine is increasingly stuttering. The reasons for this - in addition to domestic factors - are growing geopolitical uncertainties and crises, the weakening German export economy and China's technological catch-up process.

Against this background, this policy note analyses those specializations that allow conclusions to be drawn about the competitive advantages of Austrian companies in foreign trade - both at national level and at the level of the federal states. The analysis shows that it is not so much the goods structure as the export market structure that is very strongly concentrated on Europe and the USA. In view of the weak economic development in Europe and the US tariff policy, this means that the diversification of export markets must be promoted. This shows that individual federal states are more affected than others, which is due to their specific specializations.

Based on this, the EcoAustria Export Market Index is used to identify potential markets that could become the focus of export market diversification due to their characteristics.

Broader geographical diversification is recommended. Germany and the EU single market remain central anchors, and the USA is also an important - albeit uncertain - export market. At the same time, selected countries in the Middle East and stable Asian partners such as Japan, South Korea and Singapore are becoming increasingly important. The planned EU-MERCOSUR agreement also opens up new opportunities in South America, which could be strategically relevant and partially compensate for possible declines in exports to the USA.

However, it is not only market diversification that is decisive for the competitiveness of Austrian exports, but also the technological development of export products. Growth potential exists in particular in the areas of life sciences, chemicals, pharmaceuticals and green technologies. Targeted promotion of technologically sophisticated and climate-relevant export goods can strengthen Austria's position in international competition and increase its resilience to global trade risks.