2018 Index of Economic Freedom

Austria

overall score71.8
world rank32
Rule of Law

Property Rights83.5

Government Integrity73.5

Judicial Effectiveness80.9

Government Size

Government Spending19.4

Tax Burden49.9

Fiscal Health81.1

Regulatory Efficiency

Business Freedom75.5

Labor Freedom66.7

Monetary Freedom83.7

Open Markets

Trade Freedom86.9

Investment Freedom90.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 8.7 million
  • GDP (PPP):
    • $417.2 billion
    • 0.9% growth
    • 0.8% 5-year compound annual growth
    • $48,005 per capita
  • Unemployment:
    • 6.1%
  • Inflation (CPI):
    • 1.0%
  • FDI Inflow:
    • $-6088.5 million
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Austria’s economic freedom score is 71.8, making its economy the 32nd freest in the 2018 Index. Its overall score has decreased by 0.5 point, with declining scores for the property rights, government integrity, business freedom, and labor freedom indicators overwhelming a modest improvement in fiscal health. Austria is ranked 17th among 44 countries in the Europe region, and its overall score is above the regional and world averages.

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. Anticorruption measures are effective. Fiscal reforms to reduce the heavy stock of public debt have lagged behind northern neighbor Germany’s.

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Background

Austria gained independence in 1955. The European migrant crisis is the dominant domestic political issue. After a court annulled the results of a May 2016 vote, Alexander Van der Bellen, a Green Party member running as an independent, won the December 2016 presidential election. The center-left Social Democratic Party–center-right Austrian People’s Party coalition collapsed in May 2017. In an October snap election, former Foreign Minister Sebastian Kurz of the People’s Party was elected prime minister, promising tighter immigration controls, tax cuts, and a business-friendly focus. Austria has large service and industrial sectors and a small, highly developed agricultural sector. Challenges include the assimilation of migrants and the strains on labor markets and public finances caused by an aging population.

Rule of LawView Methodology

Property Rights 83.5 Create a Graph using this measurement

Government Integrity 73.5 Create a Graph using this measurement

Judicial Effectiveness 80.9 Create a Graph using this measurement

Political stability and strong rule of law have enhanced Austria’s investment climate. The land registry, to which the public has unfettered access, is reliable and features a user-friendly system for recording interests in property. The independent judiciary provides effective protection of property right, 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 by employers and employees. The overall tax burden equals 43.5 percent of total domestic income. Over the past three years, government spending has amounted to 51.8 percent of total output (GDP), and budget deficits have averaged 1.7 percent of GDP. Public debt is equivalent to 83.9 percent of GDP.

Regulatory EfficiencyView Methodology

Austria’s regulatory system is transparent and consistent with international norms, but starting a business takes time and requires many steps. Nonwage labor costs amount to about 70 percent of gross pay. The government is planning to limit nonwage hiring subsidies to workers already established in Austria. In 2017, the government launched a subsidy program for purchases of electric cars and continued telecommunications broadband subsidies.

Open MarketsView Methodology

Trade is extremely important to Austria’s economy; the combined value of exports and imports equals 101 percent of GDP. The average applied tariff rate is 1.6 percent. Nontariff barriers impede some trade. In general, government policies do not significantly interfere with foreign investment. The relatively well-capitalized banking sector offers a wide range of financial services. The five largest banking groups account for over 50 percent of total assets.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.70.2
2Ireland80.43.7
3Estonia78.8-0.3
4United Kingdom781.6
5Iceland772.6
6Denmark76.61.5
7Luxembourg76.40.5
8Sweden76.31.4
9Georgia76.20.2
10Netherlands76.20.4
11Lithuania75.3-0.5
12Norway74.30.3
13Czech Republic74.20.9
14Germany74.20.4
15Finland74.10.1
16Latvia73.6-1.2
17Austria71.8-0.5
18Macedonia71.30.6
19Romania69.4-0.3
20Armenia68.7-1.6
21Poland68.50.2
22Malta68.50.8
23Bulgaria68.30.4
24Cyprus67.8-0.1
25Belgium67.5-0.3
26Hungary 66.70.9
27Kosovo66.6-1.3
28Turkey65.40.2
29Slovakia65.3-0.4
30Spain65.11.5
31Slovenia64.85.6
32Albania64.50.1
33Montenegro64.32.3
34France63.90.6
35Portugal63.40.8
36Italy62.50.0
37Serbia 62.53.6
38Bosnia and Herzegovina61.41.2
39Croatia611.6
40Moldova58.40.4
41Russia58.21.1
42Belarus58.1-0.5
43Greece57.32.3
44Ukraine51.93.8
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