Situation is critical

Issue 87 - summer 2020

Klaus Friesenbichler, industrial economist at the Austrian Institute for Economic Research WIFO, sees developing country markets under threat.

Klaus Friesenbichler, WIFO
To what extent do you see the Austrian export industry in developing and emerging countries affected by the crisis?

Friesenbichler: Unfortunately, this will have a very negative impact. Individual supply chains have already been torn down and it will take time to restore them. Many partner companies will disappear and the growth potential of the target markets will remain undermined for longer. Emerging countries that are more integrated in world trade, for example through tourism or raw materials, are now more affected than developing countries. Rising transport costs and protectionist measures accelerate the whole thing. 

How do you see a recovery compared to traditional markets?

Friesenbichler: Developing and emerging countries are less resistant to crises. The forecasts show that the current slumps are deeper than in industrialized countries. Organizations such as the World Bank also predict that the recovery will be sluggish, provided that some countries even find growth again in the next few years. Developing countries have smaller budgets and administrations have institutional problems, which is why aid is often not received. In addition, many companies only exist informally and cannot even get access to state aids. The containment measures also usually work worse because the economic pressure to remain employed is many times greater. This affects the poorest in the world twice. The development success of the past few years is being massively threatened by the effects of SARS-CoV-2.

How could politics additionally support the export industry in overcoming the crisis?

Friesenbichler: Of course, you first have to keep the pandemic under control with reasonable economic costs. Then one should support the economic structures, through financial aid and by securing the trade structures. One step would be to restore the European single market as completely and undistorted as possible. This affects the border closures and aid payments. In general, one should strengthen trust in a rules-based global trading system.

Many thanks for the interview!
Photo: Astrid Knie

To the main story

Suddenly stopped

Or not? The world has been in a state of emergency for more than three months. The corona pandemic has struck entire economies, governments have imposed exit and contact restrictions and closed the borders to contain the virus. It is extremely challenging for internationally active Austrian companies of all sizes to keep their international business going under these circumstances.