Austria's sinking economy: Is the year of the crisis in 2025?

The alarming economic data from Austria and Germany draw a worrying picture of the economic situation in the Dach region. In Austria, the Economic Research Institute (WIFO) has drastically corrected the growth forecasts for the years 2025 to 2029. According to OE24 an average GDP growth of only 1.0 % is expected in November 1.3 % have been forecast. The political austerity measures of the possible FPÖ-ÖVP government and the unclear customs policy of the new US government under Donald Trump, which could additionally burden the economy, are particularly concerned about. The risk of a third negative growth year in a row is becoming increasingly tangible.

The situation in Germany is similarly critical. As ZDF , the German economy shrank by 0.2 % in 2024 after it had already fallen by 0.3 % in 2023. An important reason for this decline is the combination of high energy costs, severely increased interest rates and falling industrial production, especially in key areas such as mechanical engineering and automotive industry. The construction industry also suffers from high prices and interest, which leads to a decline in value creation by 3.8 %. Despite these negative developments, the service sector shows a certain growth of 0.8 %.

future prospects without a bright spot

The uncertainty about the future economic framework is increased by the upcoming reforms of a new federal government in Germany, especially in view of the unclear trade strategy of the new US administration. Economists fear trade conflicts that could particularly affect the export -dependent German economy. In this context, the Bundesbank and the Council of Experts only expect marginal growth figures of 0.2 % or 0.4 % for 2025. It remains to be seen how these worrying trends will affect the labor market, despite the current maximum number of employment in Germany since reunification.