Austria Economy

Economy

Austria, with its well-developed market economy and high standard of living, is closely tied to other EU economies, especially Germany's. The economy features up-to-date industrial and agricultural sectors. Timber is a key industry, 47% of the land area being forested. Membership in the EU has drawn an influx of foreign investors attracted by Austria's access to the single European market and proximity to the new EU economies. Slow growth in Europe has held the economy to 0.7% growth in 2001, 1.4% in 2002, 0.8% in 2003, and 1.9% in 2004. To meet increased competition from both EU and Central European countries, particularly the new EU members, Austria will need to emphasize knowledge-based sectors of the economy, continue to deregulate the service sector, and encourage much greater participation in the labor market by its aging population. The aging phenomenon, together with already high health and pension costs, poses fundamental problems in tax and welfare policies.