Economic pessimism among local managers is increasing again. According to a PwC survey, only 14 percent of Austrian board members and directors believe in growth in the country. This is a drastic drop from last year’s 31 percent. What are the reasons for this?
“We have the second most pessimistic year for Austria that we have ever seen,” said Rudolf Krickl, head of PwC Austria, who interviewed the managers. Because: “Even 68 percent believe that domestic economic production will decline.” It would then be the third year of recession in a row.
War, tariffs and costs are major concerns
The biggest concern for Austrian managers is global political uncertainty, such as the war in Ukraine, possible US tariffs or the current weakness of China and the conflict over Taiwan. According to Krickl, the second biggest problem is “cyber risk, which is much higher in Austria than in many other countries. We have a lot of mid-sized companies that are not very well positioned and have cyber attacks on very well-known companies almost every day.”
The third problem from the perspective of managers is that wages and salaries have risen extremely sharply recently due to inflation and the Benya formula (inflation plus productivity growth), which has caused companies to lose cost competitiveness. Krickl: “They also suffer from persistently high energy costs.”
In an international comparison, managers elsewhere are significantly more optimistic: 58 percent of CEOs worldwide expect an increase in global economic growth. Only 20 percent expect a decline (see graph).
More than a quarter want to cut back on their workforce
In Austria, pessimism also has consequences for personnel plans. 27 percent of entrepreneurs plan to lay off employees this year. At least 34 percent would like to expand the number of employees, but that is not that easy either. Krickl: “Many companies complain that they cannot find enough well-qualified talent.”
An alarming result of the research: 45 percent of Austrian managers doubt whether their company will still be profitable in ten years with the current strategy. Krickl: “45 percent of CEOs say: if they don’t adapt their strategies quickly, their companies will no longer exist in five to ten years. Change has always been necessary, but never with this intensity and speed.” Above all, the use of artificial intelligence could greatly help make business processes more efficient.
There is a threat of emigration and deindustrialization
What is certain is that the Austrian economy is at a crossroads. If Austria remains too expensive, there is a risk of further deindustrialization and migration of domestic industry. Krickl: “And if the US introduces tariffs, it will become even more difficult.” The result: jobs and prosperity are lost.
A new government must take countermeasures quickly. It is important to invest in education. Krickl: “We should also maintain or even expand the research bonus.” And finally, we must continue with the energy transition: “When it comes to infrastructure, we are talking about around 100 billion euros in investments and if we partially realize some of that over five to seven years, then we will have a huge boost for the economy and industry.”
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
