Stefan Fink
Photo credit: KPMG
For a better mood in society.
Logo: Schon Genial
Economy & Infrastructure

Stefan Fink: Opportunities through the power of mindset

#schongenial in conversation with UAS Professor Stefan Fink, who as Chief Economist at KPMG Austria is the central contact and coordination point for economic information and analyses within the renowned auditing firm.

#schongenial: Our times are characterised by major upheavals, massive uncertainty, some speak of a turning point, others of the great transformation. As an economist with a doctorate, you could say you have a bird's eye view of the world, especially of economic events. Where do you see the biggest challenges, the greatest risks and opportunities for Austria and Europe?

Stefan Fink: I would like to start with the term "turning point". The phrase "this time it's different" can be read countless times in the history of economic doctrine. In fact, most (national) economic developments and market movements are quite robust and can be traced back to a few fundamental determinants. People, companies, countries - all economic actors react to incentives in an attempt and try, consciously or unconsciously, to achieve their individual optimum under the given framework conditions. This makes the mindset the decisive factor for economic dynamics - regardless of time, region or framework conditions. Especially when these are uncertain. And uncertainty is currently the defining term. Uncertainty regarding geopolitical developments, potential trade conflicts, concerns about future economic and employment trends, particularly in the manufacturing sector.

Uncertainty is therefore also the greatest risk from an economic perspective. Uncertainty means that, despite the significant increase in the purchasing power of private households (as a result of wage increases and falling inflation), consumers remain extremely cautious and companies' propensity to invest remains at a low level despite noticeable interest rate cuts.

However, this also presents a great opportunity. Even the slightest bit of positive news can be the impetus for a trend reversal.

Despite all the challenges, we must not forget that the starting position of the Austrian economy in particular is a very good one: a highly qualified labour force, the innovative strength of entrepreneurs, a tight budget but the opportunity to provide structural impetus. There are worse starting conditions.

#schongenial: In your opinion, what does it take to turn opportunities into successes?

Stefan Fink : As already mentioned, I believe that mindset is one of the decisive factors. The current perception of the situation, both on the part of private individuals and companies, is very gloomy. This is also reflected in the sentiment indicators. Although employment in Germany and Austria, for example, is well above the EU average, the assessment of the situation is significantly worse than in other EU countries. Of course, the structural challenges, especially in the automotive sector, for example, are extremely high for the two closely interlinked economies. But - and this is often forgotten - there is room for manoeuvre. We are not just externally controlled and have the opportunity to provide strong positive impetus. This is necessary in order to transform the exciting opportunities into successes.

#schongenial: Traditional economic models have long assumed that people act rationally and selfishly. However, behavioural economics has shown that people often act irrationally and can be influenced by cognitive biases, emotions and social norms. What significance does this psychological aspect have for you today?

Stefan Fink: The one does not exclude the other. Viewed in isolation, the concept of rationality falls far too short, and the current situation shows this better than any textbook. For me, the term "bounded rationality" describes it best. In a given situation, everyone makes the decision that they consider to be optimal given the available information and expectations. However, this information and expectations are always embedded in a framework, in an environment. And this is precisely where the psychological aspect comes into play, without undermining the basic principle of rational decision-making. As the framework for action is currently characterised by a high level of uncertainty and a very strong negative news flow, especially in the media, this is hampering the economic momentum that is certainly possible. But psychology is also the key to reversing the trend.

#schongenial: You know #schongenial - the world's first cross-company social responsibility initiative: Together. Independently. For the good of all. Making positive
visible and conscious. With the clear aim of laying the foundations for a positive mood. What spontaneous associations do you have with this initiative?

Stefan Fink: The first association is: great, and necessary. Great because the initiative can be a very important instrument for breaking the downward spiral of sentiment, which is not always well-founded. And necessary because there are so few crystallisation points for optimism. And it's not a question here of making a point without substance, but of throwing a little more realistic and at the same time positively substantiated substance into the field.

#schongenial: If we take a bird's eye view of the corporate world and ask you in conclusion, which of the three areas of ESG (environmental, social and
governance) do you think have the greatest leverage for a flourishing economy and a successful society?

Stefan Fink: Although I don't like to make up my mind, I can't prioritise any one area. Even if ESG currently consists primarily of the "E" component (which is important and correct), the social and governance dimensions are indispensable success factors in the medium and long term. I am firmly convinced that the mindset will change. And every contribution that helps to swing the pendulum in the other direction is hugely important.

#schongenial: Thank you very much for your time and the inspiring conversation.

Back