VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank has downgraded its forecast for Austria’s economic growth in 2026, citing weaker activity in the year’s first half. The bank now anticipates real gross domestic product to increase by 0.5% this year, down from its June estimate of 0.6%. The reduction of 0.1 percentage points reflects the weaker economic performance reported during the initial six months of 2026, according to the bank.
Statistics Austria reports that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline interrupted six consecutive quarters of positive growth. Nonetheless, GDP remains 0.4% above the same period last year, whereas the first quarter saw an expansion of 0.8%. Higher energy prices during the second quarter, as noted by Statistics Austria, dampened economic output and added to the pressures on an economy that had recently pulled out of recession.
Despite the overall downgrade for 2026, the OeNB anticipates more favorable conditions in the latter half of the year. Its short-term indicator predicts 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, with Austrian exports gaining momentum. Business sentiment and industrial order books have improved since the June forecast, contributing to a more optimistic outlook for the second half of 2026.
2027 Growth Forecast Receives a Boost
In light of the improved second-half outlook, the central bank has raised its forecast for 2027. The OeNB now expects the economy to grow by 1.3% next year, compared to 1.1% previously estimated in June. The projection for 2028 remains unchanged at 1.2%. Austria’s economy grew by 0.7% in 2025 after experiencing two years of recession, but the pace of recovery has been subdued due to rising energy costs and challenging international conditions.
The latest assessment also accounts for the economic impact of Austria’s summer drought. The OeNB estimates that the drought will reduce economic 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. These developments, alongside stronger global trade, have contributed to the more positive outlook for the second half of 2026 and the upward revision for 2027.
Inflation Forecast for 2026 Reduced
The OeNB has also lowered its inflation estimate for Austria. It now projects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, down from the June forecast of 3.2%. For 2027, the bank expects inflation of 2.3%, and for 2028, 2.2%. The earlier June projections were 2.4% for 2027 and 2.1% for 2028. Recent figures indicate a downward trend in inflation, following elevated energy costs that influenced prices during 2026.
The September forecast suggests modest growth for Austria this year, with an accelerated expansion projected for 2027. The 2026 growth estimate of 0.5% aligns with the forecast issued by the central bank in March. The June update increased the estimate to 0.6%, but weaker first-half data prompted the latest downward revision. The OeNB’s revised projections span 2026 through 2028 and take into account recent economic data, international conditions, and its latest short-term outlook.