Germany and Austria Face Trade ⁢Relationship Challenges Amid Economic Weakness

The intertwined economies of Germany and Austria are experiencing strain, with trade relationships shrinking for the second⁣ consecutive ⁣year due to persistent economic headwinds. Experts are calling for decisive action to bolster⁤ competitiveness and stimulate growth.

Calls for Action on Costs⁣ and Bureaucracy

Hans ⁢Dieter Pötsch, President of the German Chamber of Commerce in Austria (DHK) and head⁤ of the VW⁣ supervisory board, emphasized the urgency of the situation. “Germany and Austria have to act braver and faster together,” Pötsch stated at a recent press conference.He⁢ highlighted the need to address pressing issues such as⁤ labor and energy costs, bureaucratic hurdles, and the promotion of innovation.

Decline in Trade Figures

While Germany remains Austria’s most meaningful trading‍ partner, and vice versa, trade figures reveal a concerning trend. In 2024, German exports to Austria, as well as ⁣imports from Austria, both fell by 5.7%, according to the Federal german Statistical Office.⁣ The decline notably⁢ affected investment goods, including machinery, machine tools, and⁤ chemical products. The automotive trade,however,remained relatively stable.

German exports to Austria totaled EUR 77.2 billion in the previous year, while imports amounted to⁤ EUR 51.5 billion. The Chamber of Commerce estimates that approximately 4,900 German companies operate in Austria. Among the largest is the retail‍ group Rewe, which includes brands such as Adeg, Billa, Bipa, and Penny.

Seeking a “Real Turnaround”

Pötsch believes a “real turnaround” is necessary, given⁤ “new geopolitical realities, the renovation of energy supply and structural changes in the labor market.” He advocates ⁣for reducing energy and labor costs, streamlining bureaucracy, and implementing targeted investment incentives to improve the economic climate in both countries.

“If we want to secure production in our countries, we need a reliable energy supply with predictable prices,” Pötsch said at a joint press conference ⁣with Gabriel‍ Felbermayr, head of the Austrian Institute for Economic ⁣Research (WiFo). He also ⁤called for “tariff conclusions with a sense of proportion and a reduction in non-wage costs” and urged Europe to undertake “a real deregulation offensive.”

EU Internal Market and Free Trade Agreements

Felbermayr pointed to the potential economic benefits of completing the EU internal market,which he said could reduce energy and financing costs and help combat the shortage of skilled workers in the EU. He stressed that German and Austrian industries require “reliable⁢ framework conditions – at home and abroad,” including the conclusion of free trade agreements with⁤ the Mercosur countries and Australia, as well as a potential “deal” ⁣with the United⁣ States.

Need for a Plan to Boost Confidence

Felbermayr ⁣expressed hope for a change of course from the new⁣ governments in Vienna and Berlin.⁢ “If you want to turn the mood, you need a plan,” he said, emphasizing⁤ that such a plan must “arouse confidence” for⁢ both companies and consumers.”The chances are good that ⁤such an agenda will be implemented.”

Germany’s designated Chancellor Friedrich Merz ⁣has pledged to relax the ⁤debt brake⁤ for defense purposes and establish a special fund for investments. A significant portion of the EUR 500 billion special fund is expected to be allocated to infrastructure projects, including the repair of dilapidated bridges and the rail network. Austria’s Finance Minister⁤ Markus Marterbauer ⁤(SPÖ)⁣ presented his double budget for 2025/26 in mid-May, which includes austerity measures. Marterbauer⁣ has indicated that the savings will be designed to ‍minimize the burden on the economy and employment.