The financial crisis – Consequences for Austria and CEE

Looking to the future, 73 percent of Austrian business leaders expect the economic situation in Europe to get worse. But the climate in Central and Eastern Europe (CEE) offers a more mixed picture: while 54 percent of managers see further downturn ahead, 39 percent believe the outlook is not yet clear. Looking at their own industry, the respondents generally foresee zero growth, if not slight shrinkage, in Western Europe but only slower growth in Central Europe. The expectations for Russia range from reduced growth to sales drops of ten percent or more.

Just how real the crisis has already become is indicated by the fact that 53 percent of the Austrian and 42 percent of the Russian and Ukrainian businesses covered by the survey complain about problems in raising finance. As for their order books, 42 percent of the Eastern European and 28 percent of the Central European companies are already reporting drops. 26 percent of the Austrian businesses are in the same predicament. With a view to 2009, 68 percent of Austrian, 25 percent of Central European and 37 percent of Eastern European managers reckon with fewer orders. That's why almost all the respondents are preparing for tougher times ahead. Austrian managers are increasingly focusing on cost-cutting programs (69%) and budget tightening for 2009 (69%), followed by freezes on recruitment (54%). In Central Europe, the priorities are tighter budgets (63%), cost savings (60%) and stricter cash management (53%). In Russia and Ukraine, cost-cutting programs (68%) are also on the agenda, ahead of hiring freezes (63%), tighter budgets and stricter cash management (58% each).

The online survey, conducted in November 2008, covered 250 executives from Austria and CEE, asking them how they expect the financial crisis to pan out.