Great pessimism

Domestic managers expect another recession

Seven out of ten Austrian board members or managing directors see black for the economy.

(Bild: ©natanaelginting - stock.adobe.com)

Economic pessimism among Austrian managers is on the rise again. According to a PwC survey, only 14 percent of Austrian board members and managing directors still believe in growth in the country. This is a drastic drop compared to the 31 percent of the previous year. The reasons for this are.

"We have the second most pessimistic year we have ever seen for Austria," says Rudolf Krickl, head of PwC Austria, who surveyed the managers. Because: "As many as 68 percent believe that domestic economic output will decline." This would be the third year of recession in a row.

War, customs duties and costs are major concerns
The main concern for Austro managers is global political uncertainty such as the war in Ukraine, possible tariffs from the USA or the current weakness of China and the conflict over Taiwan. According to Krickl, the second biggest problem is "the cyber risk, which is much more pronounced in Austria than in many other countries. We have many SMEs that are not so well positioned and we have cyber attacks on very well-known companies almost every day."

PwC CEO Rudolf Krickl: "Cyber attacks on very well-known companies almost every day."

(Bild: NADINE STUDENY PHOTOGRAPHY)

The third problem from the managers' point of view is that wages and salaries have recently risen extremely sharply due to inflation and the Benya formula (inflation plus productivity growth) and companies have therefore lost competitiveness in terms of costs. Krickl: "They are also suffering from the continuing high energy costs."

In an international comparison, managers elsewhere are much more optimistic: 58% of CEOs worldwide expect global economic growth to increase. Only 20 percent expect a decline (see chart).

More than a quarter want to cut staff
In Austria, pessimism is also having an impact on plans for personnel. 27% of entrepreneurs are planning to reduce their workforce this year. Nevertheless, 34 percent would also like to increase their workforce, but that is not so easy either. Krickl: "Many companies are complaining that they cannot find enough well-qualified talent."

(Bild: Krone KREATIV/stock.adobe.com)

An alarming result of the study: 45% of Austrian managers doubt that their company will still be profitable in ten years' time with its current strategy. Krickl: "45 percent of CEOs say that if they don't adapt their strategies quickly, their companies will no longer exist in five to ten years. Change has always been necessary, but never with this intensity and speed." The use of artificial intelligence in particular could help massively to make business processes more efficient.

Threat of migration and deindustrialization
It is clear that the Austrian economy is at a crossroads. If Austria remains too expensive, there is a threat of further deindustrialization and migration of domestic industry. Krickl: "And if the USA introduces tariffs, it will be even more difficult." The result: jobs and prosperity would be lost.

A new government must take swift countermeasures. It is important to invest in education. Krickl: "We should also maintain or even expand the research premium." And finally, the energy transition must be driven forward: "When it comes to infrastructure, we are talking about around 100 billion euros in investments and if we partially realize this in five to seven years, then we will have an enormous boost for the economy and industry."