Vienna defies the crisis: the only federal state with economic growth!

Vienna defies the crisis: the only federal state with economic growth!

Vienna is once again shining with positive economic developments. With real economic growth of 0.4 percent, the capital is the only federal state in Austria that can currently show positive figures. It is all the more remarkable that Tyrol and Salzburg, with a minus of 0.5 percent and 0.7 percent respectively, performed better than the Austrian average of -1.2 percent courier reported.

Upper Austria recorded the largest declines at -2.7 percent, followed by Carinthia at -2.4 percent. Robert Schwarz, economist at UniCredit Bank Austria, blames the weak international demand, which is particularly putting a strain on industry in these federal states.

Viennese strengths and investments

For Mayor Michael Ludwig (SPÖ), the growth in Vienna is a reason for joy and confirmation of the political measures that were taken in collaboration with the Neos. He emphasizes the social cohesion and economic strength of the city. In order to secure this upward trend, major investments in digitalization and artificial intelligence as well as the promotion of international business locations are required.

A large data center is also intended to further strengthen Vienna as a business location. Tourism, which recorded an increase of over 9 percent last year with 154.3 million overnight stays, plays a crucial role here. Despite the increase, however, value added in this sector has declined due to increased costs.

US tariffs and their effects

The situation of the economy is also influenced by external factors, primarily the tariff policy of the USA. Political uncertainties regarding customs strategies under President Donald Trump are contributing to the Austrian economy coming under pressure. The federal states of Upper Austria and Styria are particularly affected, and together with over 7,000 jobs at risk, they are recording a decline in economic output of more than 1 percent. Carinthia and Burgenland are the least affected WKO reported.

Uncertainties on international markets have increased sharply since Trump took office in January. International trade is suffering from the announced tariff increases and the EU plans to increase tariffs on US imports in response. In the medium term, this could place a greater burden on the EU than on the USA itself.

Forecasts and challenges

For 2025, it is forecast that Vienna and Burgenland will achieve the greatest growth at 0.4 percent each, while Upper Austria and Carinthia will shrink. Despite the positive development in Vienna, unemployment rates are rising in all federal states, most notably in Upper Austria, Styria and Salzburg. These developments could become even more pronounced as the US economy faces challenges due to rising inflation rates and possible recessions. Economists currently estimate the probability of a recession in the USA at 60 percent, which could also put a strain on the Austrian economy.

Overall, Vienna shows that economic challenges can be mastered with smart investments and a strong focus on digital development. The road seems rocky, but the Viennese draw on their strengths and focus on the future.