The economic research institute (Wifo) sees an export slump of at least 12 percent for this year. Extensive monetary and fiscal policy measures are necessary to stabilize companies, for example in research funding. In terms of economic policy, the most urgent need for action lies in the training of academic and non-academic specialists.
Structural policy measures to diversify exports and increase resilience are also necessary. “That means an intelligent interlinking of technology policy and export promotion with the aim of technological and geographical diversification of the export portfolio”, write the two Wifo scientists Andreas Reinstaller and Klaus Friesenbichler. “Economic policy starting points are a strategic location policy, the strengthening of the competence base, the promotion of the resilience of the export economy or the use of the service trade in the production of goods.”
The long-term study of domestic exports of goods on which the latest analysis is based shows that, after a strongly expansionary phase between 2000 and 2008, after the financial and economic crisis, they lost market share and unique selling points in global trade by 2010. Exporters are therefore concentrating more and more on exports in which there are strong specialization advantages – while the intensity of competition has increased steadily.
The current economic crisis is now showing effects of unprecedented proportions, which are also affecting foreign trade and are likely to accelerate and deepen the unfavorable development of the Austrian export economy as a result of the financial market and economic crisis of 2008/09, according to the Wifo scientists. Immediate consequences are still difficult to assess for the time being.
In a special Wifo survey on uncertainty and corporate strategies, almost three quarters of industrial companies report that they fear possible supply bottlenecks and a break in the value chain. A good third believe that global trade is a source of uncertainty. The special survey on the reaction of Austrian companies to the Covid-19 pandemic as part of the Wifo business tests from April, May and August 2020 also provided further alarming insights. This shows a precarious liquidity of the companies, which eased in August.
In May 2020, Austrian exports of goods fell by 25.5 percent compared to the previous month. The decline for this year was still forecast to be between 12 and 22 percent in the first quarter. The monthly development currently suggests that the value will be at the lower end of this range.
In a special Wifo survey on uncertainty and corporate strategies, almost three quarters of industrial companies report that they fear possible supply bottlenecks and a break in the value chain. A good third believe that global trade is a source of uncertainty.
What to do? For companies in the production of goods, R&D, cooperation with other companies and the (further) development of human capital are the most important starting points, write the Wifo experts. The most urgent need for action lies in the training of academic and non-academic specialists. The current focus of the foreign trade strategy on dual training should be expanded.
In addition, research funding should pay more attention to the targeted funding of projects that aim to link fields of technology in new fields of application. New markets would also have to be established. However, Austrian companies see themselves at a disadvantage compared to the competition, especially in the areas of marketing and sales. Above all, the development of market-specific skills should therefore be supported.
Among many other points, service exports should also be strengthened and promoted. Attention should also be paid to non-technological innovations in funding priorities. This is where unique selling points arise and customers can be retained, according to Reinstaller and Friesenbichler.
The Federation of Industry (IV) sees an opportunity in the implementation of the EU’s controversial trade pact with the Mercosur countries. This is to be issued by the EU Commission to the member states in their national languages in autumn. Here the industrialists hope for movement.