2017 Index of Economic Freedom

Austria

overall score72.3
world rank30
Rule of Law

Property Rights86.0

Government Integrity75.2

Judicial Effectiveness81.8

Government Size

Government Spending19.3

Tax Burden50.3

Fiscal Health79.7

Regulatory Efficiency

Business Freedom76.9

Labor Freedom67.6

Monetary Freedom83.4

Open Markets

Trade Freedom87.0

Investment Freedom90.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 8.6 million
  • GDP (PPP):
    • $404.3 billion
    • 0.9% growth
    • 1.0% 5-year compound annual growth
    • $47,250 per capita
  • Unemployment:
    • 5.7%
  • Inflation (CPI):
    • 0.8%
  • FDI Inflow:
    • $3.8 billion
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Austria’s small but well-developed economy is highly globalized and resilient, sustained by a skilled labor force, competitive manufacturing, and a large service sector. Openness to global trade and investment is firmly institutionalized, and the relatively efficient entrepreneurial framework strengthens competitiveness. Protection of property rights is traditionally strong, and the legal system is transparent and reliable. Anti-corruption measures are effective.

The corporate tax rate is comparatively low, but individuals face a 50 percent income tax and various indirect taxes. Austria’s overall fiscal condition compares favorably to those of its eurozone neighbors, but public spending has become excessive and unsustainable. Public debt has reached a post-war high above 85 percent of GDP.

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Background

The center-left Social Democratic Party and center-right Austrian People’s Party coalition, led by Social Democrat Federal Chancellor Christian Kern, lost seats in September 2013 but retained a governing majority. The results of the May 2016 runoff presidential election were annulled because of voting irregularities. A new election was scheduled for October, but defective glue on mail-in ballots caused a further postponement. Austria has large service and industrial sectors and a small, highly developed agricultural sector. A large influx of young migrants may present an opportunity to alleviate the strain an aging population places on long-term labor markets and public finances, but assimilating migrants could also prove challenging.

Rule of LawView Methodology

Property Rights 86.0 Create a Graph using this measurement

Government Integrity 75.2 Create a Graph using this measurement

Judicial Effectiveness 81.8 Create a Graph using this measurement

Austria’s land registry is a reliable and publicly accessible system for recording interests in property. The investment climate has been enhanced by the country’s reputation for relatively high political stability and strong rule of law. The independent judiciary provides an effective means for protecting property rights (including intellectual property rights) and the contractual rights of nationals and foreigners. Corruption is relatively rare.

Government SizeView Methodology

The top income tax rate is 50 percent, and the top corporate tax rate is 25 percent. High social security contributions are shared between employers and employees. The overall tax burden equals 43 percent of total domestic income. Government spending has amounted to 51.9 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.9 percent of GDP. Public debt is equivalent to 86.2 percent of GDP.

Regulatory EfficiencyView Methodology

Austria’s transparent and efficient regulatory framework facilitates business innovation and productivity growth. The cost of fringe benefits is among the highest in the world. VERBUND, 51 percent owned by the state and Austria’s largest provider of power, lost a third of its market value in 2015 as a result of falling electricity prices and government subsidies for renewables in neighboring European countries.

Open MarketsView Methodology

Trade is extremely important to Austria’s economy; the value of exports and imports taken together equals 102 percent of GDP. The average applied tariff rate is 1.5 percent. Austria is very open to trade and investment, but complex regulations may impede investment. The competitive and stable financial sector offers a wide range of services. There are no controls on currency transfers, access to foreign exchange, or repatriation of profits.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
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