UniCredit Bank Austria business analysis for Upper Austria:
Upper Austria putting crisis behind it
- Following pandemic-related economic slump of 6.3% in previous year, Upper Austria economy set to grow by 5% this year
- Industrial sector and also construction sector main drivers of recovery
- Industrial sector also economic driving force in recent years
- Tourism in Upper Austria gradually gaining importance on small scale
- Since 2009: Upper Austria industrial region generally posts lowest unemployment rate by national comparison — trend set to continue this year at 5.2%
All eyes are currently on Upper Austria, which is a good reason to take a closer look at the region's economy. "After the financial crisis, in the years spanning 2009 to 2020, the Upper Austria economy was second only to Vorarlberg in terms of momentum", says Stefan Bruckbauer, UniCredit Bank Austria Chief Economist, adding: "This year, Upper Austria is likely to be leading the field with a figure of around 5% when the real-terms growth performances of the federal states are ranked."
Industrial sector economic driving force
The strong economic growth seen in Upper Austria over the last decade is due in large part to the industrial sector. The real-terms value-add for the goods manufacture sector increased by more than 36% between 2010 and 2020, despite the pandemic-related slump last year, compared with a 28% increase for the rest of Austria as a whole. "In H1 2021, the production output level of industrial businesses in Upper Austria was again slightly above the pre-crisis level from H1 2019, and 20% above the output in H1 2019", says UniCredit Bank Austria Economist Robert Schwarz.
The vast majority of goods produced in Upper Austria are destined for the export market. In 2020, the year of the pandemic, the Enns region reported an 8.3% decline in goods exports, to EUR 36.7 billion. "Extraordinarily strong momentum in the three powerhouse areas of the Upper Austria export market—the mechanical engineering, automotive and metalworking industries—are this year likely to boost goods exports to a record high of over EUR 43 billion, eclipsing the former high point of EUR 40 billion in 2019", says Schwarz, adding: "Around a quarter of Austrian exports of goods originate in Upper Austria."
The unusual buoyancy of the Upper Austria industrial economy in recent years is also reflected in the labour market. In 2020, an average of more than 170,000 people were employed in the industrial sector, which equates to a 15% increase on 2009. In Austria as a whole, growth sat at almost 9%.
Construction economy a mixed bag over last decade
In contrast to the industrial sector, the construction sector in Upper Austria has seen a decline in economic output over the last 12 years. The real-terms value-add fell by more than 11% between 2009 and 2020 — twice the 6% decline seen for Austria as a whole. In both Upper Austria specifically and Austria as a whole, construction output dropped relatively sharply between 2009 and 2016, from 14.4% to 10.9%. Since then, the construction sector in Upper Austria has seen at least a solid value-add each year — with the exception of the 2020 crisis year.
In H1 2021, construction output in Upper Austria was 11.2% above the pre-crisis level for H1 2019, against a nationwide increase of 10.5%.
The unusually sluggish construction economy over the last decade was also reflected in the labour market. Employment in the construction sector in Upper Austria rose by 7.4% between 2009 and 2020. The figure for Austria as a whole was 11.5%.
Tourism gaining importance
The tourism share of the overall value-add for Upper Austria increased from 2.2% in 2000 to 2.7% in 2019, the year before the pandemic. In the same period, overnight stays were up 27% from 6.7 million to 8.5 million (Austria as a whole: + 34%). The bank's economists anticipate that overnight stays during this year's summer season spanning May to October will increase by 12% to 4.2 million compared with the summer of 2020. Given the lockdowns in H1, overnight stays for 2021 as a whole are expected to fall by 7% to 5.1 million. This represents a decline of 40% on 2019.
Upper Austria posts lowest unemployment rate
"Between 2009 and 2020, Upper Austria posted the lowest unemployment rate on seven separate occasions", says Schwarz, adding: "This year too, this industrialised region is set to lead the federal rankings with a rate of 5.2%." Employment rose by more than 12% (almost 75,000 people) to 665,700 during the same period. Much of the increase is due to the industrial sector, the public sector and business-related services.
Enquiries
UniCredit Bank Austria Economics & Market Analysis Austria
Robert Schwarz, Tel. +43 (0) 50505 - 41974;
Email: robert.schwarz@unicreditgroup.at