Bank Austria presents latest business location analysis on Burgenland:
Burgenland seizes its opportunities and gains ground
- Burgenland makes steady progress in federal province ranking and relinquishes last place – strong need for improvement in living standards
- Burgenland re-positioned as innovative business location: renowned for its vegetables and vineyards, Burgenland is increasingly attractive for manufacturing as well as high-quality services and tourism
- Above-average growth: rapid recovery in 2011 generating economic growth of 3.1 percent; growth expected in 2012 of 0.9 percent
- Small industrial sector accounted for 40 percent of total growth in 2011 – strong position as industrial location beneficial for stable economic base
- Improvement on labour market – unemployment totalled 7.5 percent in 2011, still above Austrian average; but record employment in 2011
In the last few years, Burgenland has managed to hold its ground very well in an extremely difficult environment: since the economic crisis began in 2008/2009, living standards have risen faster than throughout Austria as a whole, quality levels have increased markedly, while structurally speaking the province is in great shape too. Only in terms of its labour market has Burgenland lost ground somewhat in comparison to the other Austrian federal provinces. In comparison to the situation before the economic crisis erupted, this analysis conducted by Bank Austria economists reveals that Burgenland has fared better than Austria as a whole in three out of the four categories. "In the ranking of federal provinces, Burgenland has managed to move up one place over the last three years, thereby handing the "wooden spoon" to Carinthia", said Dieter Hengl, Director of Corporate & Investment Banking, summarising the results of the latest business location analysis by Bank Austria economists on Burgenland, which were presented today in Eisenstadt.
"Burgenland has seized its opportunities: originally a weak region from a structural perspective, Burgenland has taken advantage of the funding channels that emerged following accession to the European Union. Furthermore, Burgenland has also profited from the opening up of neighbouring economies in Eastern Europe", said Hengl, explaining the positive development. "Since the crisis-induced setback was moderate and it has recovered fast, producing estimated growth last year of three percent, Burgenland currently has an economic output that is more than four percentage points higher than its pre-crisis level. This means that Burgenland has emerged from the crisis in the best position." Thanks to the progress made on the labour market, the improved quality of the business location and the impressive structural changes underpinned by the fastest growth in business establishments throughout Austria, Burgenland is developing in a wholly positive direction.
Burgenland – in the fast lane
The result of the latest federal province ranking emphasises that Burgenland as a business location is in the fast lane – though it still lags somewhat behind. For example, there is room for improvement as regards standards of living: the gap in living standards to the Austrian average has indeed closed somewhat, but with an estimated economic output per capital of EUR 24,200 Burgenland produces the lowest figure in Austria, amounting to roughly only two-thirds of the average. In the Bank Austria ranking of federal provinces, Burgenland therefore remains in last place in this category. The economic output of Burgenland amounted to approximately EUR 6.9 billion in the last year, which is roughly 2.3 percent of the total figure for Austria. As a former "Objective 1 region", Burgenland took advantage of EU funding to adapt its economic base to modern times. Structural improvements, in transport, education and the breakdown of sectors for example, have borne fruit and helped Burgenland generate above-average growth.
Famed in Austria for its vegetables and wine, Burgenland is also increasing in popularity as a services provider and is more appealing a tourism destination. At any rate, we believe there is good reason to be optimistic that the Burgenland economy will be able to hold its ground in the global economy thanks to its improved economic foundations and a more flexible focus. The province will be able to cope even better with existing challenges on the labour market and with the convergence of living standards once it succeeds in reinforcing its position as a high quality industrial location. Expanding innovative production segments and strengthening knowledge-based services sectors over recent years has put the economy onto a much broader and therefore more stable and dynamic footing. While there is still much more work to be done, we are nevertheless confident that Burgenland will take its chances", said Hengl.
Structural modernisation lends momentum to Burgenland economy
Posting an economic growth rate in 2011 of 3.1 percent, Burgenland's rate of recovery was quite dynamic. This development was driven both by industry and services – with business-related services in particular having a very positive effect. Construction, on the other hand, made a negative contribution to growth. "Burgenland is currently feeling the effects of the reduced demand: the tighter discipline imposed on budgets has sapped strength from growth in both services and construction. In spite of this, growth in Burgenland in 2012 will total 0.9 percent, thereby beating the Austrian average of 0.8 percent", explained Stefan Bruckbauer, chief economist at Bank Austria. As far as general structural conditions are concerned, Burgenland has been revitalised. Thus while the production sector with medium-sized businesses is small, in spite of its moderate focus on exports it is very dynamic. The restructuring process and technological improvements have shifted the province away from subcontracted manufacturing towards labour-intensive sectors, thereby significantly increasing the added value produced by Burgenland. "The new position adopted by Burgenland as an innovative business location has increased its international competitiveness; its export ratio currently sits around 30 percent. Investments in education and in promising areas such as renewable energies are paying off. What is more, some of the lag in business-related services has been made up thanks to the focus on high-quality services, while the province's position has also improved in trading and tourism", said Bruckbauer, talking about the structural modernisation of the economy in Burgenland.
Industry drives Burgenland
Growth in Burgenland is increasingly broadly based and is most definitely influenced by industry. Bruckbauer added: "The industrial sector in Burgenland is small but in good shape. Accounting for approximately 15 percent of economic output, in 2010 alone it made up 55 percent and in 2011 almost 40 percent of total growth." Goods manufacturers in Burgenland are enjoying above-average success. Despite the setback during the crisis, medium-term industrial growth in Burgenland sits at more than 2 percent, which easily beats the Austrian average of 1.6 percent. The real success stories are consumer-driven sectors, like electronics, publishing and printing, plastics and the furniture and wood industry, while Burgenland is less busy in the capital goods sectors, such as mechanical engineering and the metal industry.
Improvements on labour market – but still work to do
The Burgenland labour market improved sharply in the course of the recent pick-up in the economy. In spite of an above-average drop in the jobless rate since the crisis, Burgenland posted an annual average of 7.5 percent in 2011, which is significantly higher than the Austrian unemployment average of 6.7 percent. However, this is still only the third highest reading in Austria. Just over a decade ago, Burgenland brought up the rear in this respect. Bruckbauer added: "Unemployment has been rising again since the spring of 2012 – but given the gloomy economic outlook we unfortunately expect this rate to rise further during the year to 7.8 percent. However, this means the rate is still far below its 2009 reading during the crisis, when it climbed up to 8.3 percent." The rather high unemployment data is contrasted by an employment figure of 94,300, which represented a new employment record in 2011. In 2012 so far, Burgenland has even managed to generate the strongest employment growth in Austria with an average increase of 2.9 percent on the previous year.
"Burgenland business location brochure" – adviser for economic promotion
Bank Austria also contributes to enhancing the already benign climate for economic participants in Burgenland. Transparent and efficient aid from the public sector represents an important factor completing the circle of favourable economic conditions. The new business location brochure thus contains an overview of European state aid law and the current promotion opportunities available in Burgenland. "Promoting small and medium-sized companies is a focal point of commercial and industrial investment funding in Burgenland. In this respect our professionals at Bank Austria can identify tailored funding opportunities for every company in Burgenland, and also support them in submitting their applications", concluded Hengl.
Enquiries: Bank Austria Press Office Austria
Julia Wegenstein, Tel. +43 (0) 50505 - 52854;
The complete business location analysis is available in all branches of Bank Austria in Burgenland and can also be downloaded here.