Austria's economic growth is projected to recover gradually, following the 2023-2024 recession. Reforms to reduce the budget deficit, address the impacts of population ageing and boost business dynamism are important to sustain growth and economic resilience, according to a new OECD report.
The latest OECD Economic Survey of Austria projects GDP growth to rise from 0.6% last year to 1.1% this year and 1.3% in 2027, supported by increasing real incomes, easing inflation and stable employment. Inflation is projected at 2.2% in 2027. A key risk to this outlook is a prolonged conflict in the Middle East, which could lead to higher inflation and lower growth.
"Austria's incomes and living standards are high, thanks to strong institutions, a well-educated workforce, and deep integration into European and global markets," OECD Secretary-General Mathias Cormann said, presenting the Survey in Vienna alongside Austria's Minister for European and International Affairs Beate Meinl-Reisinger, Minister for Finance Markus Marterbauer and State-Secretary Barbara Eibinger-Miedl. "Sustained reductions in the budget deficit and reforms to pensions, labour market and health policies would help ensure fiscal sustainability and address the impacts of population ageing. Policies that facilitate entry in services sectors and reduce energy costs would boost business dynamism and Austria's competitiveness."
Austria has launched a seven-year fiscal consolidation plan to 2031 to bring the deficit below 3% of GDP by 2028 from 4.7% of GDP in 2024 and reduce the debt burden over time. Additional fiscal reforms would help address rising spending pressures from population ageing, defence requirements and the climate transition. Better targeting family-related transfers and gradually phasing out fossil fuel subsidies can help meet this goal.
Linking the statutory retirement age to life expectancy gains and reducing incentives to retire early would reinforce pension sustainability. Higher full-time employment of women - by expanding affordable childcare, extending fathers' share in total parental leave, and phasing out single-earner tax credits - would also ease labour shortages and support growth.
Easing entry barriers in services sectors, reducing regulatory burdens for businesses, accelerating digitalisation and strengthening competition in key markets would boost productivity growth. Upgrading the electricity grid would support the use of renewables and reduce energy costs.
Housing affordability pressures have increased in Vienna and other large cities, as house prices and rents have risen significantly. Regularly reassessing tenants' eligibility for subsidised limited-profit housing and streamlining building permits would help make housing supply more responsive to demand.
See the full OECD Economic Survey of Austria.
