UniCredit Bank Austria Economy Analysis of the federal states 2024:
Still tough times for industrialised regions in 2024
- Second consecutive year of decline in economic output in most federal states
- Once again, the regions with a high proportion of industry were at a disadvantage
- Vienna was the only federal state to achieve growth in 2024, Tyrol showed a stagnating development, all other federal states recorded a decline in economic output
- The industrial stronghold of Upper Austria brings up the rear
- Similar to 2023, industry, construction, transport and trade recorded a decline in economic output in many regions
- In most federal states, there was positive momentum from tourism and the public sector in 2024
- The federal capital Vienna shows the strongest employment growth in 2024, Salzburg continues to have the lowest unemployment rate
In many respects, economic development in the federal states in 2024 was a repeat of 2023. In both years, the industrial and construction sectors were weak and in many regions, trade, transport and business-related services once again recorded a decline in value added. Positive impetus came from tourism, property and the public sector in most federal states. Austria-wide, GDP is expected to have fallen by 0.9 per cent in 2024. This general economic environment was reflected accordingly in the economic development of the individual federal states, with clear advantages for regions with a high proportion of services. “The federal capital Vienna led the growth ranking of the federal states for the second year in a row in 2024, with the industrial stronghold of Upper Austria in last place,” says UniCredit Bank Austria Chief Economist Stefan Bruckbauer.
Only Vienna can record growth, Upper Austria with the largest decline
There were significant differences in economic growth in 2024 between the federal states. “Vienna was the only region with an increase in economic output (+0.5 per cent) and Tyrol showed a stagnating development,” says UniCredit Bank Austria economist Robert Schwarz, adding: “All other federal states recorded a decline in their economic output.” In Salzburg (-0.4 per cent), Styria (-0.7 per cent) and Burgenland (-0.8 per cent), the economic situation was slightly better than the national average, which was a decline of 0.9 per cent. The trend was below average in Vorarlberg (-1.4 per cent), Lower Austria (-1.6 per cent) and Carinthia (-2.1 per cent). The sharpest decline was recorded in Upper Austria with a drop of 2.5 per cent.
Recession in industry and construction for the second year in a row
Real economic output in industry is expected to fall by more than 4 per cent in 2024, particularly in the key areas of the metal industry, electronic equipment and mechanical engineering. The sharpest slump in industrial activity was recorded in Upper Austria. Carinthia and Lower Austria also recorded below-average development in the previous year. The economic skies for industry were less cloudy in Vienna and Tyrol, which is mainly due to the relatively high importance of the pharmaceutical sector in both federal states. Across Austria, the construction sector recorded a decline of over 3 per cent in 2024. Building construction was particularly weak, as demand in residential construction remained subdued. The sharpest drop in production compared to the other federal states was recorded in the Burgenland construction industry, particularly in civil engineering. The construction sector in Styria was relatively robust.
The weak economic situation in industry was also reflected in the foreign trade statistics. In particular, the weak industrial economy in Germany, the most important trading partner, had a negative impact on exports of goods. Exports of goods are expected to have fallen by 5 per cent to 190.5 billion euros in 2024 as a whole. “The sharpest drop in exports was in Upper Austria, where exports are expected to fall by over 11 per cent to EUR 47.8 billion, mainly due to the weakness in exports of machinery, goods from the automotive industry and chemical products,” says Schwarz, adding: “Exports from Tyrol and Vienna, on the other hand, were relatively robust due to the strong pharmaceutical industry.”
Services sector with weak growth
In contrast to the industrial and construction sectors, the Austrian service sector saw a slight increase in value added of 0.5 per cent in 2024 compared to 2023. However, the picture was ambivalent. “Tourism, the public sector and property recorded solid growth in the previous year. On the other hand, trade, transport and economic services once again faced major challenges,” say the bank economists. In tourism, the number of overnight stays rose to a new record of 154.3 million in 2024 as a whole, which is 1.1 per cent above the previous record from the pre-pandemic year of 2019. The strongest increase in overnight stays of over 9 per cent was recorded by far in the federal capital of Vienna. The federal states with a high proportion of tourism and the public sector, such as Vienna, Tyrol and Salzburg, were therefore favoured by the development of the tertiary sector in the previous year.
The unemployment rate rose in all federal states in 2024
“The unemployment rate rose in all federal states in the previous year,” says Schwarz, adding: “but it remained at a relatively low level in most regions.” As in 2023, Salzburg and Vienna had the lowest and highest unemployment rates in 2024 at 4.2 per cent and 11.4 per cent respectively. Nevertheless, the federal capital recorded the strongest employment growth. The highest percentage increase in unemployment in the previous year was in Upper Austria, the lowest in Carinthia.
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Robert Schwarz, Tel. +43 (0) 50505 - 41974;
E-mail: robert.schwarz@unicreditgroup.at