Austria’s economic output fell for the second consecutive year in the third quarter, meaning the country is technically in recession.
Economic production decreased by 1.8 percent in the third quarter compared to the same period last year. Compared to the previous quarter, gross domestic product (GDP) fell by 0.5 percent after seasonal and calendar adjustments, Statistics Austria Director General Tobias Thomas told reporters on Friday.
Austria enters recession
But as Thomas noted, the current numbers are no cause for alarm. Forecasts pointed to a slight increase in the coming months. Although industrial sales in October have already been in decline for eight months, the decline has recently been less than before.
Weak economic performance led to a 4.2 percent decline in industry
Industry, which decreased by 4.2 percent, transportation, which decreased by 9 percent, and trade, which decreased by 7.6 percent, were effective in the weakening of economic performance compared to the same period last year. The minus here, as Thomas explains, comes primarily from weak wholesale trade. Retailers are considering emptying warehouses, which is a disadvantage for wholesalers. Public administration, education and health fields contributed to the economic situation with an increase of 5.6 percent.
Tourism developed positively
Tourism also showed a positive development, reaching a record level in this year’s summer season: “With more than 80 million overnight stays between May and October, Austrian accommodation providers booked better this year than in other summers,” he said. The number of overnight stays for both domestic and international guests increased by 2.4 percent compared to the 2019 summer season. While Arab guests discovered Austria as a holiday destination, tourists from Russia left the country. Regionally, particular increases were recorded in Vorarlberg and Styria. As Peter Laimer, Deputy Director of Spatial Economy/Tourism at the Austrian Statistical Institute, explains, city tourism in the state capitals and Vienna has also survived the corona-related crisis.
Sectors are below pre-crisis levels
But even the positive effects could not prevent more and more sectors from falling below pre-crisis levels, that is, in the third quarter of 2019. In the third quarter of 2023, the share of the food and accommodation sector was only 86.4 percent, the share of retail was 90.4 percent, and the share of the transportation sector was 91.6 percent. However, construction, other economic services, and agriculture and forestry also remained below comparable values in 2019 in July-September.
Goods manufacturing, mining and energy sectors performed better
Despite the recent decline, the goods manufacturing, mining and energy sectors performed slightly better. In addition to real estate and housing, public administration, education, health and social services also managed to increase compared to pre-Corona levels. An increase of 5.5 percent to almost 9 percent was achieved in other services (such as hairdressing, culture, gambling), financial and insurance services, and information and communication.
The current economic situation is also reflected in bankruptcies and start-ups in the third quarter: while bankruptcies are slightly above the pre-Corona crisis level, the number of start-ups is falling.