VIENNA, AUSTRIA / RankWire.AI / – Austria’s economic prospects have been reassessed by its central bank, which has lowered its growth projection for 2026 amid signs of sluggish activity earlier this year. Despite the downward revision, the Oesterreichische Nationalbank now anticipates a 0.5% increase in real gross domestic product for 2026, slightly below its previous June estimate of 0.6%. The bank explained that this 0.1 percentage point decrease reflects weaker economic performance during the first half of 2026 than previously reported.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, breaking a streak of six consecutive quarters of positive growth. Nonetheless, GDP was still 0.4% higher than the same period last year, contrasting with a 0.8% annual growth in the first quarter. The Statistics Austria attributed the slowdown to higher energy prices, which dampened economic output and added pressure to an economy that had recently pulled out of recession.
Despite the full-year downgrade, the OeNB is optimistic about the second half of 2026, expecting better conditions. Its short-term indicator suggests GDP growth of 0.1% in Q3 and 0.3% in Q4. The central bank highlighted that global trade has performed better than previously expected, with Austrian exports gaining momentum. Additionally, industrial order books and business sentiment have shown improvement since the bank’s June forecast.
2027 Growth Forecast Elevated Following Positive Momentum
The improved outlook for the latter part of 2026 has led the central bank to revise upward its forecast for 2027. The OeNB now projects a 1.3% growth rate next year, up from 1.1% in its June estimate, while the forecast for 2028 remains unchanged at 1.2%. Austria’s economy grew by 0.7% in 2025 after two years of recession, but the pace of recovery has been modest amid rising energy costs and challenging international conditions.
The latest assessment also factors in the economic impact of Austria’s summer drought. The OeNB estimates that the drought will reduce economic growth by roughly 0.1 percentage point in 2026. OeNB Governor Martin Kocher noted that industrial orders and business sentiment have improved since June despite difficult circumstances. The bank added that these developments, coupled with stronger global trade, contributed to the more favorable outlook for the second half of 2026 and the increased projections for 2027.
2026 Inflation Forecast Slightly Lowered
In addition, the OeNB reduced its inflation outlook for Austria. It now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from its June forecast of 3.2%. The central bank’s projections for 2027 and 2028 stand at 2.3% and 2.2%, respectively, compared to previous estimates of 2.4% and 2.1%. These figures indicate a declining inflation trend following elevated energy costs that influenced prices during 2026.
The September forecast suggests that Austria will experience modest growth this year, with a more accelerated expansion forecasted for 2027. The 2026 growth estimate of 0.5% aligns with the bank’s projection from March, following the June revision that raised it to 0.6%. The latest projections for 2026 through 2028 consider recent economic data, international developments, and the bank’s latest short-term outlook.