VIENNA, Aug 13 (Reuters) - Austria has a stable government,
moderate economic growth and the euro zone's lowest jobless
rate, but voter dissatisfaction runs high before elections due
by September 2013.
Social Democrat Chancellor Werner Faymann's government with
the conservative People's Party weathered the 2008/09 financial
crisis relatively well, but both governing parties lost voters
to the right-wing Freedom Party in regional elections since.
Freedom has attacked the government over its support for
bailing out highly indebted countries on Europe's periphery.
Opinion polls show the populist and eurosceptic message seems to
be gaining some traction.
STATE FINANCES
The government led by Faymann and Vice Chancellor and
Foreign Minister Michael Spindelegger, who is the leader of the
People's Party, has agreed to reduce debt and deficits to help
shelter Austria from the debt crisis gripping the euro zone.
The budget deficit is forecast at 3 percent of economic
output this year, then falling to zero by 2016.
But Austria's central government state guarantees amounted
to 38.2 percent of GDP last year, the second-highest proportion
in the euro zone after Ireland, whose state guarantees were
110.4 percent of GDP.
Economists expect Austria's economy to slow this year but
still grow around 0.8 percent and then double that in 2013.
THE RISE OF THE FAR RIGHT
The Freedom Party thrives on voter discontent over
immigration, austerity measures, crime and euro zone bailouts.
It runs neck and neck with the conservatives for second place in
opinion polls, although Freedom head Heinz-Christian Strache is
a polarising figure.
Freedom - then led by Joerg Haider, who split with the party
before he died in a 2008 car crash - helped govern Austria in a
coalition led by the conservatives from 2000 to 2007. Their
inclusion sparked outrage at home and abroad and triggered a
brief period of European Union sanctions.
UNPOPULAR BANK BAILOUTS
Austria's banking sector is highly exposed to emerging
Europe and vulnerable to a severe downturn in that region. That
was a major reason Standard & Poor's stripped Austria of its top
rating in January. Moody's has threatened to follow suit.
The country had to nationalise two banks during the 2008/09
financial crisis and took a big minority stake in another this
year. It bolstered four out of its five biggest banks- including
Erste Group Bank and Raiffeisen Bank International
- through capital injections and guarantees.
CORRUPTION AND GRAFT
A string of high-profile white-collar crime cases, some of
which involve former government members or their aides, has
shaken public trust in elected officials and prompted parliament
to adopt a sweeping package of ethics laws.
Faymann has denied any wrongdoing in an investigation into
whether he and a top aide pressured the state railways and
motorway agency into placing costly advertisements with friendly
newspapers during his tenure as infrastructure minister before
he became chancellor.
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(Reporting by Michael Shields)
