2021 Index of Economic Freedom

Austria

OVERALL SCORE73.9
WORLD RANK25
Rule of Law

Property Rights86.8

Judicial Effectiveness83.5

Government Integrity84.8

Government Size

Tax Burden45.7

Government Spending29.1

Fiscal Health90.0

Regulatory Efficiency

Business Freedom72.6

Labor Freedom68.4

Monetary Freedom81.7

Open Markets

Trade Freedom84.0

Investment Freedom90.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 8.9 million
  • GDP (PPP):
    • $476.8 billion
    • 1.6% growth
    • 1.9% 5-year compound annual growth
    • $59,111 per capita
  • Unemployment:
    • 4.7%
  • Inflation (CPI):
    • 1.5%
  • FDI Inflow:
    • $4.6 billion

Austria’s economic freedom score is 73.9, making its economy the 25th freest in the 2021 Index. Its overall score has increased by 0.6 point, primarily because of an improvement in judicial effectiveness. Austria is ranked 13th among 45 countries in the Europe region, and its overall score is above the regional and world averages.

Austria’s economic freedom scores have remained at the low end of the mostly free category for 15 years, primarily because of a consistently high tax burden and high government spending. In fact, the Index indicator score on the latter is one of the world’s worst (29.1 out of 100). For Austria to rise higher in the rankings, the government would need to prioritize a reduction in government spending.

IMPACT OF COVID-19: As of December 1, 2020, 3,325 deaths had been attributed to the pandemic in Austria, and the economy was forecast to contract by 6.7 percent for the year.

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Background

Austria regained full sovereignty from the World War II victors in 1955. Alexander Van der Bellen, a Green Party member running as an independent, was elected to the largely ceremonial presidency in 2016. Chancellor Sebastian Kurz’s conservative People’s Party (OVP) gained seats in September 2019 snap elections but fell short of a majority. The OVP formed a coalition government with the Austrian Green Party in January 2020. Austria has large services and industrial sectors and a small, highly developed agricultural sector. The government is pursuing significant upgrades to its telecommunications infrastructure with the goal of achieving nationwide 5G coverage by 2025. Challenges include assimilation of migrants and strains on labor markets and public finances caused by the aging of the population.

Rule of LawView Methodology

Property Rights 86.8 Create a Graph using this measurement

Judicial Effectiveness 83.5 Create a Graph using this measurement

Government Integrity 84.8 Create a Graph using this measurement

The legal system provides an effective means for protecting the property and contractual rights of both nationals and foreigners. The land registry is reliable and accessible to the public. The investment climate benefits from stability and the strong rule of law. The judiciary is independent and operates without political influence or interference. Austria was ranked the 12th least corrupt nation out of 180 countries in Transparency International’s 2019 Corruption Perceptions Index.

Government SizeView Methodology

The top individual income tax rate is 55 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 42.2 percent of total domestic income. Government spending has amounted to 48.6 percent of total output (GDP) over the past three years, and budget deficits have averaged 0.02 percent of GDP. Public debt is equivalent to 70.8 percent of GDP.

Regulatory EfficiencyView Methodology

Both the price of electricity and the cost of resolving insolvency have increased. Terms of employment are tightly regulated. Non-wage labor costs are high. Austria has a small but highly developed agricultural sector and a large services sector. To maintain high prices for farmers, the government subsidizes surplus agricultural exports. Subsidies for the purchase of electric vehicles remain in place.

Open MarketsView Methodology

As a member of the EU, Austria has 45 preferential trade agreements in force. The trade-weighted average tariff rate (common among EU members) is 3 percent, and 639 EU-mandated nontariff measures are in force. In general, government policies do not interfere significantly with foreign investment. The relatively well-capitalized banking sector is dominated by five large banking groups and offers a wide range of financial services.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland81.9-0.1
2Ireland81.40.5
3United Kingdom78.4-0.9
4Estonia78.20.5
5Denmark77.8-0.5
6Iceland77.40.3
7Georgia77.20.1
8Lithuania76.90.2
9Netherlands76.8-0.2
10Finland76.10.4
11Luxembourg760.2
12Sweden74.7-0.2
13Austria73.90.6
14Czech Republic73.8-1.0
15Norway73.40.0
16Germany72.5-1.0
17Latvia72.30.4
18Armenia71.91.3
19Cyprus71.41.3
20Bulgaria70.40.2
21Malta70.20.7
22Belgium70.11.2
23Azerbaijan70.10.8
24Spain69.93.0
25Poland69.70.6
26Romania69.5-0.2
27North Macedonia68.6-0.9
28Slovenia68.30.5
29Portugal67.50.5
30Serbia 67.21.2
31Hungary67.20.8
32Kosovo66.5-0.9
33Slovak Republic66.3-0.5
34France65.7-0.3
35Albania65.2-1.7
36Italy64.91.1
37Turkey64-0.4
38Croatia63.61.4
39Montenegro63.41.9
40Bosnia and Herzegovina62.90.3
41Moldova62.50.5
42Russia61.50.5
43Belarus61-0.7
44Greece60.91.0
45Ukraine56.21.3
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