In recent years, the balance on current account has increasingly become a problem of central importance to the Austrian economy. WIFO highlights various aspects of the issue in its "Monatsberichte". In the course of the 1990s, the Austrian balance on current account has steadily deteriorated. Beginning the decade with a balanced result, it reached a deficit of 1.8 percent of GDP (ATS 42.4 billion in preliminary figures) in 1996, a level last seen in the early 1980s after the second oil price shock. This year, the growth of the current account deficit appears to have been arrested, in spite of expectations to the contrary. The new strength is due primarily to weak domestic demand and favorable exchange rate effects. In the first eight months of 1997, the current account deficit was ATS 32 billion, or ATS 2 billion more than in the previous year. Yet the situation continues to be unpromising in an international comparison: in terms of current account, Austria places last but two among all EU countries, ranking just before Portugal and Greece. Nevertheless, when we look at the average of 1995 and 1996, just half of the large deficit was contributed by the balance on goods and services, while the other half stemmed from the balance on transfers. The medium-term deterioration was, however, due mostly to net imports. A key factor for the shift from surplus to deficit was tourist travel, which declined by ATS 48 billion between 1991 and 1996. Of this decline, three quarters were the result of weak tourist travel exports, and the rest growing expenditures by Austrians abroad. The price increase associated with the higher value of the Schilling explains one quarter of the deterioration of the balance on tourist travel on the export side and some 40 percent at the import side. Most of the shift to the deficit therefore is due to "structural problems", which are particularly marked in summer tourism. The increasing expenditure of Austrians abroad is chiefly a consequence of tourist travel. Although direct purchases by Austrians abroad similarly saw a pronounced rise, they still make up just one fifth of the increase in foreign currency expenditure that has occurred in the 1990s. A proper analysis of the trade balance is impeded by the uncertainty of available data. Nevertheless it appears reasonable to assume that the trade balance could not effectively counteract the deterioration of the balance on tourist travel. The trade balance deficit remained high throughout the period. In the long term, the negative balance on tourist travel may be compensated only by sustained improvement in the goods and (non-tourist) services figures. It is remarkable that the balance of commercial services (excluding tourism) had already achieved a greater surplus in 1996 (ATS +30 billion) than the balance on tourist travel. In terms of global exports, Austria – like all of Europe – was affected by a noticeable loss of real market share in the 1990s. Austria gained market shares in its export markets, but lost them in the domestic markets. The balance on transfers was clearly negative throughout the 1990s. Since 1995, it has been affected by net payments to the EU: these were ATS 13 billion in 1995, but just ATS 3.4 billion in 1996 (partly due to delayed payments made by the EU for 1995).
Die Entwicklung der österreichischen Leistungsbilanz; The Austrian Current Account
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