Austrian Business Check: Austrian companies find new momentum to overcome lethargy

The Kreditschutzverband von 1870 (KSV1870) in Austria conducted a survey among 1,300 companies. According to the results, 54% of the companies surveyed say that their business is currently going well. This represents a 3% decrease compared to August 2022. More than half of the entrepreneurs see an improvement in the economic situation in recent months, while 21% complain of a deterioration. 

With regard to the forecast for the coming year, only one third of respondents still expects a significant upturn. However, a closer look at the current figures reveals clear differences between sectors: While 37% of companies in the retail sector rate the business situation as good, this figure is as high as 60% in the construction industry. Ricardo-José Vybiral, CEO of KSV1870, interprets these figures as signs of a “post-Corona lethargy”—which the economy needs to escape now.

According to Vybiral, the biggest challenges of Austrian companies can be summarized as follows: It is primarily a matter of financial aspects. Austrian entrepreneurs cite rising energy costs, price increases on behalf of suppliers, and inflation as the most frequent negative influences. They also complain about a deterioration in payment behavior. A quarter of the companies state that the shortage of labor strongly affects them, while a third are only somewhat affected. Also in this area, there are clear differences between industries and regions. Almost three quarters of companies in Carinthia state that they can’t find enough qualified employees. The situation is similar in the manufacturing industry (71%) and the construction sector (76%). The staff shortage has far-reaching effects, ranging from additional strain on existing employees to lost sales due to unused potential, as well as impaired competitiveness. 

KSV1870 identifies considerable pent-up demand in the area of digital security. Only one fifth of all companies state that they have dealt with this topic intensively, while another 40% state that they have done so at least in part. Gerhard Wagner, Managing Director of KSV1870, warns that this is not enough: “In October 2024, the EU-NIS2 Directive will come into force. Companies that can’t provide evidence of adequate security measures by then will be excluded from the critical infrastructure of suppliers. More than a third of all companies have business relationships in this area, which would lead to significant revenue losses. Time is running out here.”

The government’s equity support program is proving to be a success story. Not only do more than half of all entrepreneurs feel positively about the program, but official figures clearly confirm this feeling. Since 2018, the average equity ratio has increased from 48.09% to 46.69%. In addition, there has been an increase in the number of companies with positive equity ratios, but also in those with negative equity ratios. 

According to KSV1870, the current economic situation is leading to restrained investment behavior. Although three out of four companies invested last year, one third of them did so on a reduced scale. A look into the future reveals an even more fragile situation: half of the companies are basing their investment decisions on economic developments. Those that do invest do so intensively, particularly in the areas of digitization, opening new business areas or sales channels, and improving services and products. This requires suitable financing: last year, 25% of companies took out a loan, while only 12% are firmly planning to do so this year, and 16% said they would “maybe” invest. This could also be due to the fact that a rising number of entrepreneurs (60% compared to 52% in 2022) consider it more difficult to be granted a loan than last year.