Austria's economic success -- not just Red Bull 'wings'
VIENNA, Sept 24, 2013 (AFP) Slot machine giant Novomatic, mounted cranes market leader Palfinger and bricks behemoth Wienerberger are hardly household names, but they are all highly successful and call the same country home: Austria.
Alongside the better-known energy drinks trailblazer Red Bull or iconic handgun maker Glock, such companies have made this Alpine country, which holds elections on Sunday, an economic success story.
Unemployment is 4.8 percent -- close to full employment and the lowest in the European Union -- while gross domestic product per capita is the 10th highest on the planet, according to the World Bank.
The landlocked eurozone member of 8.4 million people is neighbours not only with economic giant Germany, with which it shares a common language, but also majority-German-speaking Switzerland, and Italy.
Once the centre of a great empire, it also shares borders with the Czech Republic, Hungary, Slovakia and Slovenia, making it a gateway to the emerging economies of central and eastern Europe.
While the global economy stumbled last year, with the eurozone -- its main trading partner -- in recession, Austrian exports still rose 1.5 percent to 124 billion euros ($168 billion). In the first half of 2013 they were up 1.1 percent.
It did not escape the sharp global slowdown of 2009 in the wake of the financial crisis, with GDP contracting 3.8 percent, but it bounced back to expand 2.1 percent in 2010 and 2.7 percent in 2011 before slowing to 0.8 percent last year.
Austria's banks, meanwhile, are less of a success story, with the government forced to nationalise two lenders following the world financial crisis and overly aggressive expansion into eastern and central Europe.
The International Monetary Fund warned in a report this month that Austrian banks' exposure there amounted to 105 percent of Austrian GDP.
By eurozone standards, Austria's public finances are in solid shape, with the outgoing government of Chancellor Werner Faymann projecting a balanced budget in 2016.
But the IMF report noted that reforms were needed in pensions, health care and subsidies, with the country's generous social security system "complex and costly" and labour taxes "high and distortionary".
Voters though appear less concerned, and Sunday's election is expected to result in Faymann's outgoing coalition of centrist parties, which have dominated politics since 1945, winning another term.
This is due not least to Austria's low unemployment rate, which is thanks to excellent youth training, schemes to find new jobs for workers made redundant and the ease with which firms can hire and fire, said Hedwig Lutz from the WIFO economic institute.
Having Germany as your closest trading partner also helps, Lutz told AFP.
"Austria is a small country with a strong export-oriented sector. There are very good connections with neighbouring countries, in particular with Germany, and Germany managed the crisis well," he said.
