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16.07.2008

Current location analysis by Bank Austria Group Economics:
Salzburg – one of the richest regions in Europe

  • The home of art and culture also benefits from technological structural change
  • Employment above average, unemployment rate falling significantly
  • Even stronger local base needed for research and development

The province of Salzburg exhibits considerable dynamic growth thanks to powerful expertise in the service sector and structural changes in technology and continues to number amongst the wealthiest regions of Europe. Since accession to the EU, economic growth has averaged more than 2 percent per annum. Until recently, though, because of a below-average industrial outlook, Salzburg lagged somewhat behind the front-runners of Austrian growth. At plus 2.1 percent, the province was still well ahead of Germany and on a par with Bavaria. This is the outcome of an up-to-date location analysis by Bank Austria Group Economics, presented today by the head of Salzburg's provincial government Gabi Burgstaller, member of Bank Austria's Board of Management Regina Prehofer, Bank Austria's deputy chief economist Stefan Bruckbauer, and Bank Austria regional director Christian Profanter.

At around 34,500 euros per capita GDP in Salzburg far exceeds the Austrian average. Salzburg is thus in the top 25 of almost 400 regions of Europe and is the only one of the capitals in the top 10. In Germany, Salzburg would be the fifth richest region after Hamburg, Upper Bavaria, Darmstadt and Bremen. "In recent years there has been a big increase in awareness that, in addition to tourism, we need more footholds in production and exports too. This is why Salzburg is the first federal province to conclude a location agreement with its manufacturing facilities, because they are an example in terms of dynamism, innovation and export orientation, and make a major contribution to our splendid employment market data," said head of Salzburg's provincial government Gabi Burgstaller.

Structural change brings greater employment and rising exports
Salzburg also stands out because of the best figures in Austria for the second target figure in Bank Austria's location analysis – employment market data. Thus the number of people in employment has risen by 2 percent per annum in recent years and has reached a record high, with more than 230,000 people in employment. In comparison the Austrian average was plus 1.7 percent. At the same time the unemployment rate is well below the Austrian average. During 2007 it averaged 4 percent, whilst for the whole of Austria this figure was 6.2 percent. Only in Upper Austria was unemployment less, at 3.6 percent.

"Apart from its core expertise in tourism, Salzburg's economy is gaining a higher profile in the fields of trade and highly developed physical goods. Not only is this important for the employment market, it is also reflected in exports. At 45 percent, Salzburg companies' export rate far exceeds the Austrian average," said Regina Prehofer, Bank Austria Corporate Clients Director. Since 2000, exports have grown by an average of 9 percent per annum, and in the last two years the increase was even in double digits. "Salzburg is in second place in Austria overall, behind Upper Austria. Salzburg companies thus look to be in very good shape and are displaying enormous strengths in many areas," affirms Christian Profanter, Bank Austria regional director for corporate client business in Salzburg. "In other areas there are still opportunities for future development."

Bundled service expertise, more momentum in higher value industry segments
"Since Austria acceded to the European Union, the service sector's dominance has also intensified in Salzburg," is the analysis of Stefan Bruckbauer, Bank Austria's deputy chief economist. Irrespective of the framework conditions that have changed as a result, trade's share of value creation increased more than in Austria as a whole. Tourism also experienced above-average expansion.

Thanks to its traditional commercial expertise and a powerful position in services closely allied to enterprise, today the service sector contributes more than 72 percent to regional value creation. Tourism's share of overall regional performance is the second highest in Austria, at more than 8 percent. In practice this means that every fifth Austrian tourist comes to Salzburg.

The growth of employment in the service sector is correspondingly strong, where it is tourism and economic services that are expanding. According to Bruckbauer, "The employment winners without doubt include the physical goods industry in the medium and absolute high technology sectors, such as metrology."

More research and networking countering lack of innovation
Compared with Austria, Salzburg's economy exhibits a relatively weak orientation towards innovation. Compared with the federal provinces, the European Union's "Regional Innovation Scoreboard" only ranks Salzburg seventh in Austria. The variables combined in this indicator include training activities, employment structures and concrete innovative ability. "On the one hand the reason for this defect lies in generally below-average investment in the physical goods industry and in the rather traditional sector structure on the other," explains Stefan Bruckbauer. Thus, at around 1 percent of GDP, the R&D ratio is also below the federal average.

In order to increase Salzburg companies' focus on innovation and to improve the province's global competitiveness, research and development must develop a stronger local basis. There is currently still somewhat of a lack of business- and management-orientated study courses offered as part of mainstream education, and the range of technical natural science courses is limited. Focussed innovation and technology transfer measures in the fields of energy, the environment and mechanical engineering are especially interesting. The intention is to increase the R&D ratio to 1.4 percent of GDP in 2009.

"Location Salzburg" brochure: economic guidance and advice for development programmes
Together with the provincial government of Salzburg, Bank Austria's Economics department has prepared a detailed brochure which puts Salzburg's attractiveness as a location, competitiveness and growth potential to the test. The second section of the "Location Salzburg" brochure gives an overview of the grants and development scene, with national development programmes and joint financing by the EU. As a member of the UniCredit Group, Bank Austria is able to access a global network, with particular in-depth gearing to Germany, Italy and Central and Eastern Europe. The intention is that this Bank Austria guide will help companies to be well-equipped for the impending economic challenges, irrespective of whether they are at the start-up, consolidation, or expansion stage.

The "Location Salzburg" brochure is one of a new series of analyses of the federal provinces available from Bank Austria branches and downloadable from the Internet at www.bankaustria.at.

Enquiries: Bank Austria Press Office Austria
Tiemon Kiesenhofer, Tel. +43 (0)5 05 05 ext. 52819
E-mail: tiemon.kiesenhofer@unicreditgroup.at

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