UniCredit Bank Austria Economic Analysis of the Federal Provinces 2025:
First economic rays of hope in some regions
- There were significant differences in the economic development of the federal states in 2025
- Service-oriented regions were once again at an advantage
- Tyrol and Vienna with strongest growth, Upper Austria and Carinthia still in recession
- In most federal states, there was positive momentum from the public sector and trade in 2025
- Varying regional industrial and construction activity
- Unemployment rate rose in all federal states this year, with the highest unemployment rate still in Vienna and the lowest in Salzburg
The economic development of the Austrian federal states varied greatly in 2025. While some regions benefited from robust industry, a stable public sector and a recovery in trade, others continued to be severely impacted by the weak industrial and construction sectors. Overall, the regional results reflect the persistent structural differences between service- and industry-orientated federal states. "The regional differences have become even more pronounced in 2025. Provinces with a high proportion of services also had an advantage over industrialised regions this year," says UniCredit Bank Austria Chief Economist Stefan Bruckbauer.
Tyrol and Vienna in the lead, Carinthia and Upper Austria still under pressure
Nationwide, real economic output is expected to increase by 0.3 per cent in 2025. In a comparison of federal states, Tyrol and Vienna led the way with growth of 1.3 per cent and around 1.0 per cent respectively. Burgenland (+0.8 per cent), Lower Austria (+0.4 per cent) and Styria (+0.2 per cent) also recorded positive growth. The economy in Salzburg (-0.1 per cent) and Vorarlberg (-0.2 per cent) remained virtually stagnant. The sharpest decline in economic output in 2025 was once again recorded in Upper Austria (-0.5 per cent) and Carinthia (-1.4 per cent).
"Tyrol and Vienna will be the growth winners among the federal states in 2025, while Carinthia and Upper Austria will continue to struggle with considerable economic burdens," says UniCredit Bank Austria economist Robert Schwarz.
Industry and construction sector with partly different developments in the regions
Industry remained the central burden factor in many federal states in 2025. Regions with a high dependency on mechanical engineering, metal processing and the electronics industry were particularly affected. Positive exceptions included Tyrol and Vienna, where the pharmaceutical industry and individual branches of industry such as other vehicle construction in Vienna provided growth impetus.
The construction industry also developed unevenly. While building construction continued to decline in most federal states, civil engineering provided positive impetus in many regions - particularly in Burgenland, Salzburg and Styria.
Subdued demand from Germany, the most important export market, and global uncertainties in general - keyword: US tariffs - had a negative impact on goods exports in all federal states in 2025. Overall, Austrian goods exports are likely to fall by 3 per cent in 2025. "The sharpest drop compared to 2024 was in goods exports to the United States this year," explains Schwarz. The decline was particularly sharp in Vienna, where exports are expected to fall by over 6 per cent to less than 29 billion euros, especially for pharmaceutical products. Upper Austria also recorded a significant decline, with an expected drop of over 3 per cent to around 46.8 billion euros, due to weak exports of machinery and automotive parts.
Services sector as an anchor of stability
In the services sector, the overall picture in 2025 is mixed but stabilising. The public sector, real estate and information technology made a positive contribution to growth in value added in many federal states. Trade recovered in all regions after a weak year in 2024.
Despite an expected increase in overnight stays of around 1 per cent to a new record of over 156 million in 2025, tourism businesses remain under pressure. High personnel and energy costs are putting a noticeable strain on the industry, meaning that an increase in value added in the accommodation and catering sector compared to 2024 could probably only be achieved in the federal capital of Vienna.
Labour market: unemployment rose nationwide
"The unemployment rate rose in all federal states compared to the previous year," says Schwarz. Industry-orientated regions such as Upper Austria and Styria were particularly hard hit. Salzburg and Tyrol continue to have the lowest unemployment rates, while Vienna once again recorded the highest rate despite strong employment growth.
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Robert Schwarz, Phone: +43 (0) 50505-41974;
E-mail: robert.schwarz@unicreditgroup.at