Austria's industry on the way to relaxation - uncertainty remains!

Austria's industry on the way to relaxation - uncertainty remains!

The current economic situation in Austria shows signs of a stabilizing tendency. The Economic Research Institute (WIFO) reports that the economic valley sole has passed. In the first quarter of 2025, the gross domestic product (GDP) grew by 0.1 percent compared to the previous quarter, while high stocks enable industrial companies to meet their new orders through warehouse cuts. Nevertheless, the uncertainty remains high due to US customs policy, which is a major challenge for many companies.

The pessimistic outlook of consumers and a high job dismantling risk indicator additionally strain the mood. By the end of May, 23,000 people were registered more unemployed than in the previous year, and the work volume of the employed people shrank by 1.1 percent in the same period.

Influence of US customs policy

The customs policy of US President Donald Trump ensures considerable uncertainties among trading partners, including Austria. Trump has repeatedly announced tariffs since the beginning of his term of office and often relativizes it, which has a negative impact on the economic forecasts for many affected countries, especially Germany. Germany has a trade surplus with the USA, and the announcement of 20 percent tariffs on EU goods has already triggered concern. If a duty of 25 percent comes into force, a decline in German exports to the United States is forecast by almost 43 percent, which in turn could lead to a decline in German GDP by 0.2 percentage points. The uncertainty resulting from this situation is identified as an essential inhibition threshold for economic growth. Statista sees the impending development as a potential threat to the entire European economic landscape.

estimates of the WIFO have shown that Austria has to decrease by 0.23 percent at short notice. In the long term, this decline could even increase to 0.33 percent. In addition, an export of exports is planned by 0.76 percent, which could increase up to 1.4 percent in the medium to long term. The influence of these tariffs could also be reflected in the price level, which is expected to fall by 1.14 percent in Austria, while prices in the United States could increase by 7.26 percent.

trade conflicts and future challenges

Uncertainty in the international markets has increased since Trump took office in January 2025, as the "Trade Policy UncertaTy Index" shows. The EU urgently needs to find a common answer to the customs threats in order to secure the internal market as a stable frame for free trade. In view of the potential effects on the economy of both regions, a trade war with negative consequences for everyone involved is considered likely. The EU plans countermeasures and also signals customs increases on US imports.

The long -term consequences of these trade conflicts are currently still unclear, but a necessary preparatory plan is required to adapt to the Unilateral approach of the United States and to further diversify international trade relationships. WIFO emphasizes that the current challenges can significantly burden both Austria and Europe as a whole.

Overall, the economic situation of Austria remains tense. However, collateral in the industrial economy could be improved in the medium term through targeted measures and strategic adaptation to the changed trade conditions. [Wko] (https://www.wko.at/aussenwirtschaft/us-zoelle- effects) emphasizes that a constructive dialogue is necessary to stabilize the trade relationships between the USA and the EU.