Russian-Ukrainian conflict slows economic potential
With the Russian-Ukrainian conflict, Austria and the EU have a trouble spot right on their doorstep. That doesn’t have a positive effect on the economy. The interdependence of the Austro-Hungarian economy is strong with both the Russian and the Ukrainian. But simply because of the size of the Russian market, it is stronger between Vienna and Moscow than between Vienna and Kiev, says Michael Löwy, responsible for international affairs at the Federation of Industrialists (IV).
“A politically stable situation between the two countries is important for our economic activities and investments,” said Löwy in an interview with the APA. “Both countries are important economic partners for Austria, both are large markets. Possible growth rates are very interesting because of the high population figures in Russia and Ukraine.” The conflict between the two states could have a negative impact on economic relations.
However, growth is currently stagnating in both countries; they are not growing as fast as other economic areas. “For us it is important that the EU-Ukraine Association Agreement is really complied with, the Ukrainian market is open to trade and investment and that there is legal certainty,” says Löwy.
Austrian companies are the sixth largest foreign investor in Ukraine. Around 200 local companies have branches there. Mainly mechanical engineering products and vehicles, chemical and medical products are exported. The most important import goods from Ukraine are iron ore, wood and goods made from it, as well as electrical machines.
In 2020, Russia was the second largest investor in Austria after Germany and ranked 14th in terms of domestic direct investment. Around 500 Russian companies have branches in Austria, while 650 Austrian companies have branches in Russia. The most important Austro export goods to Russia are machinery and equipment, pharmaceutical products and food. The majority of imports from Russia are natural gas and oil (80 percent). Metals and wood (3 percent) as well as goods made from them are also imported. According to Löwy, the new Nord Stream 2 gas pipeline is “important for Austria’s energy supply” as it brings more volume for the supply to Europe.
In both countries, for example, Raiffeisenbank International (RBI) from Austria is an important financial institution.