The 2020 epic fall in the Austrian economy might be not the end of the story

In economic terms, Austria is a relatively successful European country with a real GDP per capita level of $52,746 (constant 2015 US dollars) in 2019. In 2020, the COVID-19 pandemic heavily affected almost all economies, and Austria was not excluded. Figure 1 shows the trajectory of real GDP growth since 1970 as reported in the OECD database. In 2020, the fall of $3705 (see Figure 2) is much larger than in 2009 ($2003). We are going to compare this fall with that in other developed countries in future posts and discuss the relative success of various economies. Austria is not the worst between them, but this fall is the largest in Austria since 1970.  It is worth noting that the Austrian economy had significant difficulties not only in 2009 but also between 2012 and 2015. 

The absolute fall of $3705 in 2020 is a good measure of economic disaster since every Austrian citizen lost personal income proportional to $3705 and this loss affected public behavior as expressed by crowded demonstrations against the government measures related to COVID-19. The relative fall of 7.55% (see Figure 3) is a better measure when we compare different countries. The overall fall varies between economic segments and the service-related business suffered the most. Austria has a significant portion of GDP associated with tourism and this part of the economy does not look sustainable in the mid-term perspective. The start of 2021 revealed that Austria suffers not only individual problems but also the difficulties related to the crash in the EU cooperation in the civil domain (border closer, fight between EU members for medicine and vaccines, fight between government and society). The start of 2021 does not look promising with a dramatic increase in new COVID-19 (UK version) cases and lockdown in April. The vaccination rate is still slow and, with a half-year protection half-life, that makes the repeated cases possible. 

There is good news in the OECD data. The Austrian population grew are a 0.5% rate in 2020. The extensive population growth is important assistance to any economy. The US has been demonstrating the importance of “fresh blood” in the economy since the very beginning and the border opening is an effective alternative to MAGA. Financial markets are happy.   

Figure 1. Evolution of real GDP per capita in Austria according to the OECD database.

Figure 2. Evolution of real GDP per capita in Austria according to the OECD database. The 2020 fall is $3705 (constant 2015 US dollars).   

Figure 3. Evolution of the growth rate in real GDP per capita in Austria according to the OECD database. The 2020 fall is 7.55%. Due to population growth, the real GDP fall is 7.05%, the population growth in 2020 was 0.5%.