The Austrian economy dropped by 5.7% in real terms in the 4th quarter of 2020 compared to the same quarter of the previous year, according to preliminary calculations by Statistics Austria.
Compared to the 3rd quarter of 2020, the gross domestic product (GDP) fell in real terms by 2.7%. For the entire year 2020, the GDP recorded a decline of 6.6% in real terms.
Compared to the 3rd quarter of 2020, the gross domestic product (GDP) fell in real terms by 2.7%. For the entire year 2020, the GDP recorded a decline of 6.6% in real terms.
"Austria's economic performance in the Corona year 2020 recorded the most striking decline since 1945 with a minus of 6.6%. GDP thus fell more sharply by 2.8 percentage points than in the year of the financial crisis 2009. At -5.7%, the decline in the 4th quarter of 2020 was smaller than recently feared. The fact that Austria's economy was hit quite hard in a European comparison is in particular due to the strong decline in gross value added in accommodation and food service activities. Their share in Austria's GDP is more than three times larger than in Germany, for example", says Statistics Austria Director General Tobias Thomas.
In the 4th quarter of 2020, consumption of private households recorded substantial losses of 11.2% in real terms compared to the 4th quarter of 2019. This is mainly caused by a sharp decline in consumption of services (-21.7% in real terms). Compared to the 3rd quarter of 2020, consumption of services dropped by 14.8% in real terms. Final consumption expenditure of government increased by 4.1% in real terms compared to the 4th quarter of 2019 (+1.6% in real terms compared to the previous quarter).
In foreign trade, services also were affected more severely. Compared to the 4th quarter of 2019, export of services dropped by 21.8% and import of services by 14.1% (real terms). The recorded decline of export and import of goods (-2.4% and -0.1% in real terms respectively) was comparatively low.
Capital formation stabilized slightly after the outbreak of COVID-19 and hardly declined by 0.7% in real terms compared to the 4th quarter of 2019 (+0.4% compared to the previous quarter). In particular, capital formation in total machinery and equipment recorded positive growth rates (+1.7% compared to the 4th quarter 2019, +2.8% compared to the previous quarter).
The lockdown during the 4th quarter 2020 had a significant impact on accommodation and food service activities, trade and transportation (-19.7% in real terms compared to the 4th quarter of 2019) as well as on arts and entertainment (-21.5% in real terms compared to the 4th quarter of 2019). Manufacturing was still below the pre-crisis level (-1.3% in real terms compared to the 4th quarter of 2019), but recorded a slight growth (+1.7% in real terms) compared to the 3rd quarter of 2020.
Construction was also less affected by the crisis (-2.7% in real terms compared to the 4th quarter of 2019). Irrespective of COVID-19 containment measures, financial services (+3.1% in real terms compared to the 4th quarter of 2019) and real estate activities (+2.2% in real terms compared to the Q4 2019) as well as information and communication (+1.6% in real terms compared to the 4th quarter of 2019) increased moderately.
The COVID-19 pandemic hit the Austrian economy in 2020 (-6.6% in real terms) much harder than the financial crisis of 2009 (-3.8% in real terms compared to the previous year). According to current available data, Austria was thus in the lower third in comparison with the EU member states. Germany, which is the most important trading partner, outperforms Austria (-4.9% in real terms), whereas Italy, the second most important trading partner, underperforms Austria with a minus of 8.9% in real terms.
The decline in the producing sector (-5.8% in real terms) is less severe than in the service sector (-6.7% in real terms). In particular, government-related services (e.g. public administration, human health and education) supported the service sector. Compared to other industries, the decrease of construction (-2.3% in real terms) was moderate. Manufacturing and electricity were hit harder with a drop by 7.2% and 7.7% in real terms, respectively. Due to lockdowns, accommodation and food service activities (-35.2% in real terms), arts, entertainment and personal services (-19.6% in real terms) as well as transportation (-15.5% in real terms) suffered the strongest losses. Trade dropped by 5.6% in real terms.
The crisis also affected gross fixed capital formation, which fell by 4.9% in real terms in 2020. With the exception of intellectual property products (+1.7% in real terms), all investment categories recorded a decline. Capital formation of transport equipment dropped by 14.2% in real terms, followed by capital formation in machinery (-12.1% in real terms).
Consumption expenditures also suffered massive losses during 2020 (-9.6% in real terms. This was mainly due to the heavy losses in consumption of private households (-9.8% in real terms). As on the production side, services were mostly affected (accommodation and food services, transportation, personal services). In contrast, durable consumption goods and digital services increased. Government consumption expenditure grew by 0.8% in real terms due to the acquisition of goods associated with COVID-19 containment measures.
The performance of manufacturing is also reflected in foreign trade. Export of goods declined by 6.9% in real terms, import of goods declined by 7.4% in real terms. Again, services were affected stronger. Both exports (-18.8% in real terms) and imports of services (-17.4% in real terms) dropped sharply, considerably due to international travel restrictions.
