Austria

In-depth country-focused analysis on Austria's economic, political and operational risk environment, complemented by detailed sector insight

Austria

Austria is an investment hub for many of our clients. The country acts as a gateway to the single European market as a member of the EU. Its services industry accounts for two thirds of its GDP, and tourism is the country's fastest-growing sector. Austria's industrial sector is mostly made up of small and medium-sized enterprises, but is a major player on the world stage. We make sure our clients make sound business choices in Austria, using our unique Total Analysis model. We keep them informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. We give further in-depth analysis on six of Austria's most important industries. Combining interactive data and forecasting with our risk-assessed and results-proven analysis gives our clients a winning approach. We help you, as our client, identify the opportunities and risks – making doing business in Austria simple.

Country Risk

Austria Country Risk

BMI View:

Core Views:

  • Austrian real GDP growth will accelerate in 2016 but economic activity will lag behind regional peers, despite improving external demand from the eurozone.

  • At a federal level, support for the Freedom Party (FPO) exceeds that of either the SPO or OVP, which we expect to hold throughout 2016. The FPO is now the junior government coalition member in two Austrian states (Burgenland and Upper Austria).

Key Risks:

  • Lacklustre consumer spending could result in a lower negative contribution from imports. This would bolster growth over the year though we do not feel this could significant deviate from forecasts in 2016 and 2017.

  • Continually robust support for the far right Freedom Party in 2016 remains a salient political risk consideration.

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Austria Industry Coverage (16)

Commercial Banking

Austria Commercial Banking

BMI View:

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Infrastructure

Austria Infrastructure

BMI View:

BMI View: Austria's construction industry will register a ninth consecutive year of negative growth in 2016, coming in at -0.2% and a value of USD20.5bn. From 2017 to the end of our forecast period in 2025, we predict muted positive growth sustained by an improving economy and EU investment into major rail development and residential building.

Latest Updates And Structural Trends

  • Construction and infrastructure industry growth will remain negative in 2016 at -0.2%, before entering a positive trend of weak positive growth to 2024.

  • The transport ministry is targeting USD28bn investment in rail and roads...

Medical Devices

Austria Medical Devices

BMI View:

BMI Industry View : The Austrian medical device market is well established, with above average per capita spending at just under USD300. We anticipate that the market will see below average growth within the Western Europe region. In keeping with most developed markets, the main growth drivers in the Austrian market are the increasing health needs of the ageing population and the search for new technologies to improve patient outcomes and increase health service efficiency.

Headline Industry Forecasts

  • We forecast that the market will grow at a US dollar 2014-2019 CAGR of 2.4%, which will see the market increase from USD2,307.4mn in 2014 to USD2,598.8mn in 2019. The lower dollar growth rate reflects a...

Metals

Austria Metals

BMI View:

BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

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Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Austria Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

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Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Austria Metals

BMI View:

BMI View: Globally, iron ore prices will remain subdued due to weak demand growth in China and expanding output by major miners in Australia and Brazil. China will see output slow as the country's iron ore miners operate on the higher end of the global iron ore cost curve.

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Global Iron Ore Forecast
2014 2015e 2016f 2017f 2018f

Austria Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

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Global Nickel Forecasts
2013 2014 2015e

Austria Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Austria Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

Austria Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Austria Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

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Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Austria Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

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BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f

Pharmaceuticals & Healthcare

Austria Pharmaceuticals & Healthcare

BMI View:

BMI View: GDP growth in Austria is forecast to accelerate to 1.8% in 2016 and 1.9% in 2017, after expanding by a moderate 0.6% over the past four years. This modest recovery comes after a long period of near-stagnation; Austria's economy grew by just 2.9% between 2008 and 2015. We believe pharmaceutical spending will post modest growth over the medium term as the government links growth in public healthcare expenditure with nominal GDP growth. Overall, we view the Austrian pharmaceutical and healthcare market as relatively stable and insulated from sudden downgrades.

Headline Expenditure Projections

  • Pharmaceuticals: EUR6.44bn (USD7.09bn) in 2015 to EUR6.55bn (USD7.01bn) in 2016; 1.7% in local currency terms and -1.1% in US dollar terms....

Power

Austria Power

BMI View:

BMI View: Austria's power sector is mature and the domestic grid is extensive, ensuring near universal access to electricity and sufficient supply to meet current consumption demands. As a mature market, where public investment capacity is restricted, there are few development projects in the pipeline meaning total generation is expected to grow only slowly throughout the ten-year forecast to 2025. Consumption is expected to grow more rapidly and towards the end of the forecast period Austria is therefore likely to become a net importer, increasing its reliance on a more integrated European electricity grid.

Headline Power Forecasts (Austria 2015-2021)
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Renewables

Austria Renewables

BMI View:

BMI View : Austria continues to be one of the largest markets for renewable energy in Europe. Continuing low electricity prices however undermine the economic viability of non-hydro renewables projects. In addition, the lack of ambitious long-term renewables targets and the meeting of Austria's 2020 targets before the deadline provide little incentive for stronger renewables support in this unfavourable market climate. This has led to cuts in FiT rates for both solar and wind, meaning our forecasts see only limited growth beyond 2020, with overall non-hydro renewable generation expected to grow by an average of just 3.76% between 2016 and 2025.

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Renewables Headline Forecasts (Austria...

Telecommunications

Austria Telecommunications

BMI View:

BMI View : Consolidation has not led to higher prices, as the no-frills segment continues to dominate. Customers are now accustomed to cheaper prices for good-enough services, and are unlikely to move onto more premium plans unless operators can make the case. This is not only apparent in terms of mobile services, with 3G continuing to dominate, but also in the broadband market, through dedicated mobile broadband and DSL. Investments have been made in VDSL and DOCSIS, but the market's structure towards flexibility also hinders the movement towards convergence.

Key Data

  • The mobile market reported its first y-o-y growth in eight quarters in Q315, ending September with 13.12mn subscribers

  • Dedicated mobile broadband remains the largest component of all broadband connections...

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