VIENNA, AUSTRIA / RankWire.AI / – Following weaker economic activity during the initial half of the year, Austria’s central bank has lowered its growth projection for 2026. The Oesterreichische Nationalbank now anticipates a 0.5% increase in real gross domestic product this year, compared to its June estimate of 0.6%. The bank explained that the 0.1 percentage point reduction reflects a weaker-than-expected economic performance during the first 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 this decline, GDP was still 0.4% higher than a year earlier, down from 0.8% annual growth in the first quarter. Statistics Austria attributed the second-quarter slowdown partly to rising energy prices, which added pressure to an economy that had recently emerged from recession.
Despite the overall downgrade for the year, the OeNB anticipates more favorable conditions in the second half of 2026. Its short-term indicator forecasts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank also noted that global trade has outperformed earlier expectations, and exports of Austrian goods have gained momentum. Industrial order books and business sentiment have both improved since the bank’s June forecast.
2027 Growth Forecast Receives an Upgrade
The improved outlook for the latter part of 2026 has led the central bank to revise upward its forecast for 2027. The OeNB now expects economic growth of 1.3% next year, up from 1.1% in its June estimate. Its forecast for 2028 remains unchanged at 1.2%. After experiencing a 0.7% growth in 2025, following two recessionary years, Austria’s recovery has remained muted amid higher energy costs and challenging international conditions.
The latest assessment also considers the economic impact of Austria’s summer drought, which the OeNB estimates will reduce growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher noted that, despite difficult circumstances, industrial orders and business sentiment have improved since June. The bank explained that these positive developments, along with stronger global trade, have contributed to the brighter outlook for the latter half of 2026 and the increased 2027 forecast.
Inflation Expectations Adjusted Lower for 2026
The OeNB has also revised down its inflation forecast for Austria. It now predicts that the Harmonised Index of Consumer Prices will average 3.0% in 2026, down from its June estimate of 3.2%. The forecast for 2027 stands at 2.3%, and for 2028, 2.2%. These projections differ slightly from June, which had estimated inflation at 2.4% for 2027 and 2.1% for 2028. The recent figures suggest a downward trend in inflation, partly due to the effects of elevated energy prices during 2026.
The September forecast indicates modest growth for Austria this year, with a more rapid expansion expected in 2027. The 2026 growth estimate of 0.5% aligns with the forecast made by the central bank in March. The earlier June projection had increased this to 0.6%, but weaker first-half data prompted the latest downward revision. The OeNB’s updated projections extend through 2028, taking into account recent economic data, international developments, and its latest short-term analysis.