Vienna's Economy Grows Second Strongest This Year

Economically, there have been few bright spots in this country this year. Although Austria is expected to record slight growth after two years of recession, the economy did not really get going in 2025 either. Across the federal states, a mixed picture emerges: According to an analysis by Bank Austria, regions with a high service sector share, such as Tyrol and Vienna, performed better, while industrially strong regions like Upper Austria struggled.

Plus 1.0 percent forecasted for Vienna

Nationwide, real economic output is expected to increase by 0.3 percent this year, according to the bank's economists. In a state comparison, Tyrol with a forecasted increase of 1.3 percent and Vienna with around 1.0 percent were ahead. Burgenland (+0.8 percent), Lower Austria (+0.4 percent), and Styria (+0.2 percent) also recorded positive growth. There were declines in Salzburg (-0.1 percent) and Vorarlberg (-0.2 percent), with Upper Austria declining by 0.5 percent and Carinthia by 1.4 percent performing even worse.

Not surprisingly, the industry had a burdensome effect, especially in regions with high dependence on mechanical engineering, metal processing, and the electronics industry. Positive exceptions included Tyrol and Vienna, where the pharmaceutical industry and individual industrial sectors such as other vehicle manufacturing in Vienna provided growth impulses. Different signals came from construction: While building construction continued to decline in most federal states, civil engineering provided momentum in many regions - particularly in Burgenland, Salzburg, and Styria.

US tariffs and demand in Germany

The economic development in Austria was also dampened by US tariffs and the subdued demand in the important export market of Germany. Bank Austria's economists expect a total decrease of 3 percent in goods exports this year - with the strongest expected export losses in Vienna (-6 percent to just under 29 billion euros).

Meanwhile, the service sector made a positive contribution to value creation. Here, the public sector, real estate, and the IT industry stood out. According to the information, trade has also recovered in all regions after a weak year in 2024. In tourism, a record number of overnight stays is expected, but high personnel and energy costs continue to burden businesses, "so that a value creation increase in the accommodation and gastronomy sector compared to 2024 was probably only achieved in the federal capital Vienna."

(APA/Red)

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