VIENNA, AUSTRIA / RankWire.AI / – Austria’s economic prospects are under review as the country’s central bank adjusts its growth forecasts for the coming years. The Oesterreichische Nationalbank has lowered its 2026 economic growth estimate following sluggish activity in the year’s first half. The bank now anticipates real gross domestic product to increase by 0.5% this year, a slight downgrade from the 0.6% projected in June. This adjustment reflects a 0.1 percentage point reduction due to weaker economic performance observed during the initial six months of 2026.
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. Despite the decline, GDP was still 0.4% higher than the same period last year. In comparison, the first quarter saw an annual growth rate of 0.8%. Statistics Austria pointed out that rising energy prices negatively impacted economic output during the second quarter, adding pressure to an economy that had recently recovered from recession.
Nevertheless, the OeNB remains optimistic about the latter half of 2026, despite the downward revision for the full year. Its short-term indicator forecasts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank highlighted that global trade has outperformed previous expectations, and Austrian exports have gained momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast.
2027 Growth Outlook Gets an Upgrade
In response to the stronger second-half prospects, the central bank has increased its forecast for Austria’s economic expansion in 2027. The OeNB now predicts growth of 1.3%, up from 1.1% in its June estimate. The projection for 2028 remains unchanged at 1.2%. Austria saw a 0.7% rise in GDP in 2025 after two years of recession, but the recovery has been modest amid higher energy costs and challenging international conditions.
The latest assessment also accounts for the economic impact of Austria’s summer drought, which is estimated to reduce growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher noted that industrial orders and business sentiment have improved since June despite ongoing difficulties. The bank emphasized that these developments, together with stronger global trade, have contributed to an improved outlook for the latter half of 2026 and the upward revision for 2027.
2026 Inflation Forecast Adjusted Lower
The OeNB has also revised downward its inflation outlook for Austria. It now expects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, a decline from its June forecast of 3.2%. For 2027, the bank projects inflation at 2.3%, and for 2028 at 2.2%. The previous June projections were 2.4% for 2027 and 2.1% for 2028. These updated figures suggest a downward trend in inflation, influenced by elevated energy costs during 2026.
The September forecast indicates modest growth for Austria in 2026, with an accelerated expansion expected in 2027. The 2026 growth estimate of 0.5% aligns with the bank’s forecast issued in March. The June revision had increased this to 0.6%, but weaker data from the first half led to the current downward adjustment. The OeNB’s latest projections for 2026 through 2028 incorporate recent economic data, international developments, and its latest short-term assessments, painting a nuanced picture of Austria’s economic trajectory.