The volume of trade and investment between the Western Balkans, Serbia and Austria is increasing. We are convinced that this economic relationship can be deepened even more. In this spirit, it is crucial that the rule of law is guaranteed and political stability preserved ~ Christoph Neumayer
Austria’s economy successfully traversed the pandemic, achieving moderate economic growth, low inflation and social stability. And yet, according to the General Secretary of the Federation of Austrian Industry, Christoph Neumayer, responding to the new global challenges remains a complex issue.
“It is true that Austria managed the COVID crisis quite well. However, the debt ratio had to be increased significantly to avoid a high unemployment rate. Supply chains also gave us a headache, though they are slowly returning to normal,” explains our interlocutor. Sadly, he adds, the next crisis has emerged and is hitting us hard. Above all, the unsettling energy crisis and corresponding inflationary development continues to jeopardise Austria’s economy. Current numbers indeed portray a gloomy picture. Recent estimates show projected GDP growth of +0.2% for 2023 – which represents de facto stagflation. Moreover, we estimate possible inflation as high as 12 – 14% for the first months of next year. The industrial sector even expects to face recession in the first half of 2023.
The Federation of Austrian Industry, VÖI, has always worked to liberalise foreign trade and integrate Austria into the European common market. Which tasks leading in those directions do you envisage today, when we are witnessing a reversal of globalisation?
– Free trade creates jobs, reduces prices and increases product diversity. Austria is a strongly export-oriented economy. An export ratio of 59% proves that wealth and jobs are based on trade. According to the calculations of the European Commission, 585,000 domestic jobs are secured through exports to non-EU countries.
The new priorities of the government are very relevant to us and could attract the attention of Austrian companies to the Serbian market
Access to global markets is therefore crucial for us. I do not expect a reversal of globalisation, but perhaps new aspects may occur. Deepening the European Single Market and establishing new free trade agreements, such with Mercosur and the U.S., are certainly needed. At the same time, current geopolitical developments call for intensive multilateral cooperation.
Speaking at the recent Western Balkans Conference in Berlin, Austrian Federal Minister Susanne Raab confirmed your country’s stance supporting the acceleration of the EU integration process for the countries of the region. How are these developments influencing economic cooperation between Austria and the Western Balkans, and Serbia in particular?
The volume of trade and investment between the Western Balkans, Serbia and Austria is increasing. We are convinced that the economic relationship can be deepened even more. In this spirit, it is crucial that the rule of law is guaranteed and political stability preserved.
The Federation of Austrian Industries supports Austria’s position regarding the EU integration of the Western Balkan states. We are convinced that the final goal of EU membership, within the rather complex integration process, is attainable and will be followed by intensified trade.
Among the topics being discussed the most today are offshoring and nearshoring. To what extent do your members consider Serbia a place where Austrian companies could seek new partners?
– Serbia is a major partner for Austria, with about 400 Austrian companies active in the country. Austrian direct investments of approximately three billion euros and a trade volume of around a billion euros are remarkable.
Yes, we do believe in the potential of increasing the volume of trade and investment. In this context, the new priorities of the government are very relevant to us and could attract the attention of Austrian companies to the Serbian market.
Your Federation has underlined the importance of research, technology and innovation for a wealthy future economy many times. How satisfied are you with the support to advances in these areas that’s being provided by the Austrian state?
– Innovation and R&D investments always pay off. A research and development ratio of 3.26% of GDP also highlights Austria’s strong position within the EU in this respect (ranked third after Belgium and Sweden). We welcome the recently adopted national transformation initiative with a total of 5.7 billion euros earmarked until 2030.
The shortage of skilled labour remains a key challenge for Austrian companies. It is therefore of utmost importance to carve out the full potential of the labour market and strengthen employment incentives
This creates an essential basis for the necessary financial planning security and long-term investments in the decarbonisation of our industry. Austria’s rather unique investment incentive instrument provides investments with grants worth 14 per cent of the total amount of the investment. So, we are happy in general, but – as always – there is room for improvement.
The members of VÖI represent more than 80 per cent of Austria’s domestic manufacturing companies. How are they dealing with increased automation and labour force shortages?
– The shortage of skilled labour remains a key challenge for Austrian companies. It is therefore of utmost importance to carve out the full potential of the labour market and strengthen employment incentives.
In this respect, we recently launched a campaign entitled “Work must pay off”, which comprises 10 concrete proposals (including, among others, tax incentives for overtime or switching from part-time to full-time, and tax breaks for people who remain in employment after reaching the age of retirement). When it comes to automation and digitisation, it is clear that we make ourselves more resilient and competitive by achieving a more productive economy. That ultimately secures and creates jobs.
How attractive are renewable energy sources, decarbonisation practises and environmentally friendly industry for your members?
– New technologies provide a great opportunity for us. In fact, industry sees itself as a partner and enabler of the green transformation that is already underway. Austria’s industry is among the world’s champions in climate protection and sustainable production. We are proud to see that many of our members are engaging in innovative projects, like research on hydrogen as a green technology, innovative ways of resourcefriendly production, the decarbonisation of steel production. As an example, Austria is a world champion when it comes to carbon-efficient cement production. At the same time, we must manage this sensitive transformation in a responsible way. That means being aware of the challenges and ensuring political goals remain realistic.
What kinds of opportunities do you see when it comes to the Green Agenda in Serbia?
– Serbia is a country with huge potential in many respects. Modern waste management and sewage treatment plants, effective recycling processes in general and more renewable energy projects could boost Serbia’s economy and raise the country’s living standard. The government has announced a strong focus on these issues for good reason.