Austria is a federal democratic republic and it is formed by nine federal states. The country is broadly politically stable and business-friendly. The head of the state is the Federal President, who is directly elected by popular majority vote every six years. Currently, this position is hold by Alexander Van der Bellen since the 2016 presidential elections. Austria is governed, since January 2020, by a coalition between Chancellor (head of government) Sebastian Kurz's center-right Austrian People's Party (Österreichische Volkspartei: ÖVP) and the Greens (Die Grünen). Additionally, federal states have their own governments with local, executive power. Government stability relies on internal unity within the Greens and overcoming potential conflicts due to power imbalances stemming from the ÖVP's far larger share of the vote (37.48% versus the Greens’ 13.9%).

Political stability triggers a favorable and transparent system for business. Thanks to its industrialized and social market economy, Austria ranks high in terms of GDP per capita. However, the COVID-19 has hit heavily its economy. According to the IMF, Austria's economy contracted by 6,6% in 2020, which is even worse than that of the 2008 financial crisis. The government in March 2020 introduced sweeping measures to counter the spread of coronavirus disease 2019 (COVID-19). During the first wave of the pandemic, Austria was one of the European countries with the lowest number of infections and deaths per person, which allowed the gradual lifting of the common extended measures from mid-April. However, ongoing measures and the uncertainty regarding the global situacion will cause operational challenges in 2021. For this year, the economy is expected to grow by 3,5%, according to the IMF. Projections with respect to the spread of the virus forecast that daily infections are expected to continue following a decreasing trend in Austria, after a relative increase during mid-March 2021 (IHME). 

The government's core policy challenge for the foreseeable future will be limiting the negative impact of the coronavirus disease with the help of wide-reaching fiscal policy measures. The government has pledged overall support measures of EUR41 billion, or 11% of GDP (including a EUR4-billion emergency fund financing protective gear, short-time work subsidies, and grants to micro-businesses), and an additional EUR9 billion for guarantees. Notwithstanding substantial fiscal support and the gradual loosening of lockdown restrictions since mid-April, any economic activity linked to large public gatherings will be unable to fully normalize ahead of the widespread availability of a vaccine. The first public-sector surpluses in over 40 years in 2018–19 have given the government substantial leeway to limit company insolvencies and unemployment resulting from the COVID-19 crisis. Public opinion has largely supported the way in which the government has managed the crisis.

There are occasional political scandals related to allegations of corruption or misuse of power, including politically motivated appointments to positions in state bureaucracy or companies in which the state has a stake. Although governments typically withstand such accusations, they have the potential to suddenly shift parties’ political fortunes. This adds an element of unpredictability to Austrian politics.

Moreover, the government that collapsed in 2019 introduced reforms aimed at cutting public spending and encouraging investment. The ÖVP, which in January 2020 returned to power in coalition with the Greens, will continue to implement this agenda once the immediate impact of COVID-19 is mitigated. The Greens will support the reforms but will expect progress on environmental legislation, while the ÖVP will want any measures to have a limited impact on businesses. This will likely cause difficulties during the government’s term.

Given the current Covid-19 situation, some unrest episodes are taking place, such as marches or small rallies protesting against restrictions. Austria faces a moderate risk of jihadist terrorist attacks primarily affecting major urban centers, especially Vienna. The likelihood of security-related threats having an impact on businesses is low.

Austria remains politically stable despite the sudden collapse of the previous government in May 2019 after a political scandal. Generally, the political system is efficient and transparent for business, although the division of power between local, state and central governments can create inefficiencies in decision-making. The government is seeking to remedy this.​​​​​​ The threat of unconstitutional changes in government is very low, though scandals have the potential to result in resignations and leadership changes mid-term.

Governments have traditionally been coalitions between the country’s two largest parties: the center-left Social Democratic Party of Austria (SPÖ) and the center-right Austrian People’s Party (ÖVP). However, the government that collapsed in May 2019 was a coalition led by the ÖVP alongside the far-right Freedom Party of Austria (FPÖ). The current ÖVP-Greens coalition is also a novel government formation at the national level, but will likely not represent a significant departure from the status quo.

Additionally, regarding its foreign relations, Austria is a member of the European Union, but it is not in NATO. The country enjoys good and peaceful relationships with its neighbors. 

Austria is considered a Full Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 16 out of 167 countries scored.

The country ranks 18 at the 2020 Human Development Index developed by the United Nations Development Programme.

Austria is usually a favorable business and investment destination, but there is currently a heightened risk of disruption caused by the COVID-19 virus outbreak and related emergency measures. In the long run, the operational environment is likely to remain stable and attractive for domestic and international competitors. Further structural reforms to reduce the administrative burden for businesses are likely to be introduced. Austria’s unions are strong, but industrial action is rare. The country maintains solid trade links with its neighbors in the EU and Western Balkans.

Austria has a robust infrastructure, transparent institutions, and harmonious labor relations. However, a slow and sometimes cumbersome bureaucracy can be an obstacle to operations. State institutions are receptive to foreign businesses and tendering processes are transparent and fair. The judiciary is generally independent and effective. There is a very low likelihood of state interference in business.

Austria has highway and road infrastructure meeting the western European standard and public transportation is well equipped and easily accessible. Mountain roads are well-tended, but winter weather can see snow blocking some areas (snow tires and other equipment is recommended for driving in mountainous areas). There is a relative lack of high-speed rail compared with other countries in Western Europe. The government continues to invest highly in developing infrastructure, though there are weaknesses in rural areas.

Austria has lower levels of labor unrest than many other Western European countries.

Restrictions imposed in response to the global coronavirus disease 2019 (COVID-19) pandemic are likely to continue in place for some months, causing significant operational disruptions. Ongoing restrictions and continue evaluation of those in place will cause operational uncertainty throughout 2021. 

Overall, Austria ranks 27 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 15 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.

Overall crime levels are likely to remain low. Systematic, large-scale violent and armed crime is particularly rare. Petty crime affects Vienna and other tourist centers but is nevertheless limited. Drug-related offenses have been targeted by increased surveillance of dealer locations in Vienna. Racially motivated attacks occur periodically and remain a risk following increased migration to Austria in recent years. An increase of anti-Semitic incidents over the last two years was reported in June 2020. Organized crime groups are mostly multinational and mainly focus on trafficking people, arms, vehicles, and drugs, taking advantage of Austria’s geographic position as a gateway between Eastern and Western Europe.

Austria is an internally stable country and overall civil unrest risks are lower than in several other European countries, including France and Germany. Furthermore, COVID-19 virus restrictions are likely to continue to reduce the size of protests including environmental activism. On the other hand, COVID-19 restrictions are triggering eventual unrest episodes of marches or short rallies against those.  Anti-EU, anti-Islam, and anti-refugee protests, as well as counter-demonstrations, remain moderately likely. In addition, environmental activism organized by groups such as Fridays for Future and Extinction Rebellion is likely to continue following the continued gradual loosening of restrictions around COVID-19. Moreover, law enforcement in Austria is reasonably effective. Security forces can be heavy handed in their responses to such incidents.

The risk of terrorist attacks in Austria is lower than in many other Western European countries, including neighboring Germany. However, there is a moderate risk of both low-capability and more sophisticated jihadist terrorist attacks launched by lone actors or small cells. Soft targets such as transport hubs, music and sports venues, shopping centers, or public spaces near tourist attractions or in city centers are likely to be most at risk. Moreover, there is a heightened risk of far-right terrorism and anti-Semitic incidents in Austria.

The likelihood of a coup d’état or rebellion, or an interstate war that would affect Austria’s territory, is very low. Austria supports US-led operations globally and would likely be involved in future military interventions led by the US.

Overall, Austria ranks 4 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.

Austria is not currently among the most cyber-attacked countries in the world.  According to Kaspersky cyber threat map, it is ranked as the 40 most cyber-attacked country.

No vaccinations are required to enter the country.

Austria ranks 26 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).

Austria's climate is continental in the north and the east of the country, with heavy rain in the summer. Temperatures fluctuate significantly between seasons and snowstorms are common in winter months in the west of the country (mountainous region).

If you plan to visit Austria, stay informed by Civil Protection.