What will the central European economies look like in 2018?

If you’re considering doing business in central Europe (Germany, Austria, Switzerland, among others) in 2018, what could that fiscal climate look like? Let’s take a quick look.

Germany: Germany is the big fish of Europe, maybe even moreso after Article 50 was triggered regarding Brexit. All told, Germany’s economy is doing well in the final quarter of 2017 — industrial output increased by the most in six years this August, and services growth is strong. Investor confidence is steadily improving after a lull in the late spring and early summer. GDP growth is expected to rise in both 2017 and 2018. There are some concerns about policy uncertainty, especially around trading partners, and there are some concerns about the formation of the new state government. Overall, though, it seems like Germany should remain a strong economic play in 2018. You’ll find stable levels of growth and 100M+ German-speaking consumers in the DACH region.

Austria: This is where the situation gets trickier. They just elected a 31 year-old (31!) nationalist as Chancellor, largely because of high immigration levels up to 2015 that shifted a lot of the thinking and voting to the right. More and more EU nations are shifting to the nationalistic right. This essentially happened in the U.S. recently too, and economic performance hasn’t waned — while some claims are exaggerated by President Trump, the Dow Jones is doing very well under his Presidency. The Economist thinks the new Austrian Chancellor will push neweconomic renewal, greater transparency, and (badly needed in perhaps Western Europe’s most corporatist economy) a leaner and less clientelistic state.” It does make sense that someone very conservative on immigration would focus there first (close the borders), then make sure the economics were in place to drive success with Austrians. As a result of that, 2018 could be a boon year for Austria — but it will be interesting, and potentially scary, to watch all told.

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Switzerland: Since Switzerland’s relationship to the EU is already a watered-down version of single-market membership, they may not be terribly screwed over if the EU begins to wane in 2018. Overall the Swiss economic market is considered positive, with export growth making up for some other gaps. OECD even calls Switzerland “an enviable economic position” to potential investors. (They don’t just mean Swiss banks.) And, because of Austria’s switch to the right, there is some concern in Switzerland too — which was beset by immigration problems of their own.

Overall, it looks like the DACH market is poised to have a strong 2018 in terms of growth and nothing too crazy politically. (Sorry, U.S.!) It’s positioned to be a good environment for expansion, building, or scaling. Let us know if you’re interested — or if you have any potential concerns.

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