As a result of the coronavirus pandemic, the Austrian economy fell by 7.4% in 2020, which is the biggest drop since 1945. Compared to other EU countries, the hotel industry and gastronomy in particular experienced the biggest impacts. The cultural and entertainment industries were also heavily affected, while the economic impacts are less noticeable in public administration, healthcare and social services.
Inflation slowed slightly in 2020, especially food and housing became more expensive, while fuel and heating oils became cheaper. Following the government’s restrictive measures, the Austrian Labor Office registered a record 522,000 in April 2020. unemployed, it was the sharpest drop in employment since the 1950s. The degree of economic impact of the crisis is influenced by the situation in Germany, Italy and the USA, which are Austria’s most important export partners. The three largest rating agencies (S&P, Fitch, Moody’s) continue to rate the creditworthiness of the Republic of Austria as the second best.
The Austrian government has earmarked a rescue package worth EUR 49.6 billion for 2020 and 2021 to mitigate the coronavirus crisis, which corresponds to 12.5% of GDP for 2019. The largest share of government aid is contributions to kurzarbeit (EUR 1billion) and contributions to fixed costs (€12 billion), which can be applied for by businesses affected by a significant decline in turnover. The rescue package includes, among other things, tax deferrals and reductions, state guarantees for loans or aid for municipalities. A crisis fund with non-refundable contributions was established for the self-employed and small businesses.
A stimulus package worth EUR 1billion was also approved to revive the economy. It includes aid for particularly hard-hit sectors, but also a number of support measures and investments, e.g. reducing the tax burden on employees, relief for companies to create jobs and investments in environmental protection, digitalisation and regions.
Post-COVID-19 opportunities for foreign exporters
Transport industry and infrastructure
According to allcountrylist, Austria is one of the leading European investors in the construction of railways and roads. Due to Austria’s climate commitments, there will be increasing pressure to reduce greenhouse gas emissions, which is already being reflected in the transport sector.
In the field of automobile transport, Austria has set itself the goal of reducing emissions by 30% by 2030, including with the help of hydrogen. The largest Austrian concern for the production of electricity, Verbund, is working on a project that aims to build a European chain for the production and transport of green hydrogen, which can be used not only in transport, but also in industry.
Further investments are aimed at strengthening public transport. Opportunities will be offered here, especially in Upper Austria, where new suburban train lines (S-Bahn) are expected to be put into operation. In Vienna, the construction of the new U5 metro line and the extension of the U2 line began in January 2021. A total of 11 stations with a length of 9 km will be built, the project is to be implemented by 2028 in two phases. The plan is also to build 2 metro lines in the city of Graz. As part of climate protection, the Austrian government wants to introduce the so-called “1–2–3 Ticket”, which will significantly reduce the price of an annual public transport ticket.
In 2020, planning work also began on the construction of the 66 km section of the northern route from Vienna to Bernhardsthal on the Austrian-Czech border. Tenders of state infrastructure companies ASFiNAG and ÖBB are published on the ProVia digital platform.
In accordance with Austria’s plan to achieve climate neutrality by 2040, the government plans additional support and subsidies for the installation of photovoltaic panels up to 500 kWp in the next three years. Wien Energie will invest EUR 500 million in the construction of infrastructure for the production of solar energy and in climate protection. Opportunities for companies occur in connection with the increase in interoperability and with the digital integration of energy networks (Smart Grid).
An integral part of public procurement is the design, construction, monitoring and rehabilitation of energy infrastructure, including pipe systems and the corresponding use of measuring and control technology. Vienna alone intends to triple the production of solar energy by 2025 by installing solar devices and increase the volume of energy produced to 600 MW by 2030. Up to EUR 18 billion will be massively invested in transmission systems, ensuring the construction of distribution networks and the construction of an efficient energy storage system.
Other opportunities for Czech companies are offered in the area of clean technologies, waste processing, air cleanliness control, energy efficiency, in the production of hydro and wind energy, biomass, in the supply of steam and water turbines, water wheels.
Wiener Stadtwerke intends to build and operate a hydrogen filling station this year and gradually become a hydrogen center for the entire eastern region. By 2025, Wiener Stadtwerke plans to invest EUR billion in the construction of its own infrastructure, incl. mobility and energy, of which EUR 4.25 billion will go directly to climate protection investments.
Wien Energie, which will work closely together on the project, want to build and commission a megawatt electrolysis plant this autumn, from which hydrogen will be transported to the filling station in Leopoldau. The Wiener Netze will subsequently ensure the redistribution and transport of hydrogen.
In 2021, the law on the construction of renewable sources is to enter into force, which is supposed to create the conditions for fulfilling the goal of covering 100% of electricity consumption from renewable sources by 2030. To achieve this goal, the government anticipates annual investments of approximately EUR 10 billion. Solar and wind power plants should have the main share in the increase in energy from renewable sources, less hydropower and even less energy should be obtained from biomass.
The Austrian software industry is one of the few sectors of the economy that is among the winners of the covid-19 crisis. The increasing penetration of digitization due to remote work, home schooling of children and the provision of state bonuses for new investments brought the sector a 7-8% increase in turnover in 2020.
After partially improvised solutions during the covid crisis, Austrian companies now have more space to focus on strategic ICT issues. There is a demand for solutions for secure remote working (Remote Working) and for compliance (Compliance) in hybrid offices. Cloud solutions, such as SaaS (Software as a Service) offerings, are still on the rise.
The potential is in the rapid and factual support of investment and product development decisions with digital tools, in innovative inventory and logistics solutions, and in the optimization of supply chains. In the field of e-health, there are opportunities for telemedicine and health monitoring solutions based on IoT. Software applications that use artificial intelligence for early detection and diagnosis of diseases and infections are still in their infancy.
The Ministry for Digitization and the Economy, together with the Austrian Chamber of Commerce, will provide small and medium-sized enterprises, within the framework of the KMU.DIGITAL project, a subsidy in the maximum amount of EUR 9,000 to support digitization between 2021 and 2023. The money can be used for professional consultancy in the field of e-commerce, online marketing, IT and cyber security, but also for the actual implementation of digital projects, e.g. e-shops. A total of EUR 15 million has been earmarked for this project.
The Austrian construction industry has so far been able to cope with the effects of the covid-19 crisis relatively well, and construction investments did not experience a very large decline (-3.2%). Thanks to the increase of the government’s support package for cities and municipalities by an additional EUR billion, the financial situation of the largest contractors of construction projects will remain stable in 2021.
In residential construction, the legal requirements for new energy standards to achieve the Paris climate targets will mean an increasing demand for thermal rehabilitation of buildings. This trend is reflected in many subsidies from the state and federal states. As in transport, the use of hydrogen and other alternatives in heating is also being investigated in the construction industry. The city of Vienna is planning a massive construction of solar panels and wants to use, among other things, the walls and roofs of buildings.
Another perspective is offered in the optimization of work processes through digital solutions, e.g. in the modeling and construction of buildings and project documentation using BIM (Building Information Modeling) and other tools for innovative design. The Austrian construction industry is still far from a “digital construction site”, the greater the potential for increased efficiency in all phases of projects, i.e. from 3D printing for the construction of more complex building elements to IoT security solutions, e.g. collision warning systems using RFID (Proximity Warning) chips.
Healthcare and pharmaceutical industry
Part of the program of the Austrian government for the period 2020-2024 is the construction of primary care units, i.e. doctor’s offices and hospital facilities, the strengthening of preventive measures (examinations, screenings) and vaccination activities within the relevant programs. Austria has a relatively high density of beds for intensive care in hospitals, which is a sector where Czech companies can establish themselves.
As part of the declared regionalization, the Austrian government wants to achieve greater self-sufficiency in Austria and Europe, especially in the production of medicines and currently also half-masks of the FFP2 and FFP3 classes. Evidence of this decision is the prevention of the transfer of the only European penicillin production of the Sandoz division (Novartis group) from Tyrol to Asia. However, even after the crisis has passed, new opportunities exist in the supply of devices for testing, diagnosis and patient monitoring in medical facilities.
Software products for medicine, telemedicine, applications for healthcare and e-health are on the rise, and the importance of digital solutions is also growing. In Graz, the importance of 3D printing in medicine is being tested, e.g. for the production of tailor-made drugs, 3D structures, etc. There is also room for cooperation in the field of innovative products.
In Austria, there is a growing group of pensioners with higher financial resources who invest in their health. Czech spas offer a wide range of procedures designed to treat various health problems at a high level. However, these high-quality and extensive offers of Czech spas and wellness hotels need to be intensively presented on the Austrian side.
Rail and rail transport
The new framework plan of the Austrian railways ÖBB includes investments of a record amount of EUR 17.5 billion, which will be directed to the construction and modernization of the railway infrastructure in the next six years (2021-2026). It focuses primarily on improving and strengthening rail transport within urban agglomerations, expanding infrastructure for freight transport, electrification, making regional railways more attractive and strengthening, and digitalisation.
Roughly a third of the costs will go to the construction of new tunnels, about EUR 3 billion to the purchase of new cars and EUR 250 million to renovating the railway station. Investments also include the expansion of Park & Ride parking lots and noise protection. Currently, the ÖBB railway network is 90% electrified, and by 2035 it is to be completely neutral in terms of CO₂ emissions. In places where electrification is not possible, alternative drives are expected in the future, e.g. using hydrogen.