After strong growth years, Austria’s foreign trade stagnates in 2023
After a dynamic development in 2022, the “Forschungsschwerpunkt Internationale Wirtschaft” (FIW) expects a low growth of Austrian exports and imports in 2023.
FIW’s fourth annual report on the “Situation of Austria’s Foreign Trade” was presented together with Labor and Economics Minister Martin Kocher. The annual report is dedicated to the current international framework conditions for Austria’s foreign trade and trade developments in 2022. In addition, study authors Harald Oberhofer (WIFO, WU Vienna) and Robert Stehrer (wiiw) as well as study author Bettina Meinhart (WIFO) presented short- and medium-term forecasts for the expected future development of Austria’s foreign trade relations.
The year 2022 was dominated by the Russian attack on Ukraine and the subsequent energy price crisis. Households and companies were massively affected by the rise in energy costs. From the 2nd half of the year, the resulting supply shock and high inflation rates left their mark on the global economy. Austria’s dependence on Russian natural gas posed particular challenges for domestic households, companies and politicians. Austrian foreign trade held up relatively well under these difficult conditions, but suffered from the significant deterioration in terms of trade, i.e. a worsening of the relationship between export and import prices, in 2022. Prices for Austrian goods exports increased by 5.5 percentage points less than import prices. In pure volume terms, Austrian exports have developed more dynamically than imports: According to the forecast, total exports of goods and services rose by 8.8% in real terms in 2022, while imports increased by 5.1%.
In 2022, the negative terms-of-trade effect outweighed the quantity effect, so that in 2022 Austria’s trade balance deteriorated by €7.6 billion compared with 2021 and showed a deficit of €-20.5 billion. The more positive development of the services balance, which was driven by a massive increase in travel exports (more trips to Austria by foreign tourists), was able to offset the trade deficit last year. In 2022, the current account balance will be in positive territory at € 200 million.
For 2023, the “Research Centre International Economics” (FIW) forecasts growth in total exports of 0.3%. Imports are expected to rise by 0.9% this year. Mainly due to rising import prices – caused by the energy crisis – Austria could show a negative current account balance in 2023 for the first time since 2001. According to the forecast, the deficit will amount to € -1.8 billion (0.4% of GDP).
In 2023, the deterioration in terms of trade based on the study forecast continues with a decline of 1%. Exports of goods are expected to increase by 0.1%, with services exports recording growth of 1.2%. Total imports will grow by 0.9%. The difference between exports and imports results from higher services import growth of 3.3%. The trade balance could deteriorate to -€23.3 billion due to the further negative terms-of-trade effect. This deficit will no longer be fully compensated by the services balance surpluses. In 2023, the Austrian current account will show a negative balance with a deficit of €-1.8 billion (0.4% of GDP). According to the forecast, the current account should return to a small surplus in 2024.
The FIW Annual Report 2023 is available here and the data appendices are available here.