Export Boom Benefits Major Industrial Regions

After three years of weak growth, the economy in Austria was once again set on the path to recovery in 2004. Gross value added rose by almost 2 percent, or double the rate of previous years. Stimulation came from export demand, while domestic demand remained sluggish. Such demand factors impacted on the pattern of regional growth. Those Austrian states where major export-focused production enterprises are located clearly enjoyed an advantage. The pace of expansion was greatest in Styria (+3.8 percent in gross value added), driving the entire southern region, which achieved the highest growth rate (+3.1 percent) in all of Austria. The western region also grew at an above-average rate (+2.2 percent), due chiefly to Vorarlberg (+2.9 percent) and Upper Austria (+2.7 percent), whereas Salzburg (+1.7 percent) and Tyrol (+1.4 percent) lagged somewhat behind. Salzburg lacked a growth motor, and in Tyrol the growth rate was diluted by the performance of manufacturing and parts of the services sector (such as tourism). The tourist industry and some other services industries also affected last year's development in Carinthia (+1.5 percent). The eastern region, on the other hand, at a plus of 1.3 percent fell behind the Austrian average due to slack economic growth in Vienna and Burgenland. While Lower Austria (+2.6 percent) shared the benefits of an export boom, Vienna (+0.6 percent) and Burgenland (+0.5 percent) were checked by weak domestic demand.