As a small open market economy and member of the Eurozone, Austria was affected by some of the problems existing in Central and Western Europe. Compared internationally, however, the country did well in 2012, which is generally considered to have been an economically difficult year.

Financial markets continue to further refine their assessments of public budget risks. This previously resulted in a reduction in Austria's credit rating from AAA to AA+ by the rating agency Standard and Poor's at the beginning of 2012. However, Standard & Poor's improved Austria's outlook from negative to stable in January 2013, primarily because Austria is expected to benefit from its strict budgetary policy and specialisation in knowledge-intensive export sectors. The Austrian economy is expected to overcome the temporary low of 2012 in coming years, and continue to grow slightly faster than the Eurozone.

It was not until November that the WIFO (Austrian Institute for Economic Research) leading indicator, a monthly composite indicator that provides an early indication of turning points for the Austrian economy, rose once again. Many factors are now pointing to a stabilisation of the economic situation in the Central European region. However, WIFO and IHS (Austrian Institute for Advanced Studies) forecast only small positive real economic growth for Austria in 2013 (+1.0% and +0.8%, respectively), and even in 2014 both expect gross domestic product to grow by only +1.8%, still 0.5 percentage points below the OECD (Organisation for Economic Cooperation and Development) average.

The Austrian banking system continues to be viewed as stable in 2013. There is no danger of insufficient lending to companies and private creditors, which is likely to benefit the non-life segment in particular.

In the life insurance segment, the entire industry will continue to be confronted by low interest rates and tax-law difficulties in 2013. The demographic situation is worsening slowly but steadily and the challenges this brings continue to be acute, in particular with respect to funding for the pension system, health care and nursing care.

Statutory changes in the Austrian Maximum Interest Regulation (Höchstzinsverordnung), which currently stipulates a maximum of 1.75% for the guaranteed minimum interest rate, could create additional challenges.

The Austrian Association of Insurance Companies (VVO) expects total premium growth of 0.2% for 2013. The decrease in life insurance (-2.6%) will be outweighed by growth in the healthcare (+3.0%) and property and casualty (+1.8%) areas.