VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has revised its economic growth projection for 2026 downward following weaker activity observed in the first half of the year. The Oesterreichische Nationalbank now anticipates a real gross domestic product increase of 0.5% for this year, contrasted with its June forecast which predicted 0.6%. The bank stated that the 0.1 percentage point cut reflects a weaker economic performance during the initial six months of 2026 than previously reported.
Austria’s economy saw a 0.1% contraction in the second quarter compared to the previous three months, according to Statistics Austria. This decline broke a streak of six consecutive quarters of positive growth, although GDP remained 0.4% higher than a year earlier. In comparison, the first quarter of 2026 registered an annual growth of 0.8%. Statistics Austria explained that rising energy prices exerted pressure on economic output during the second quarter, adding to the challenges faced by an economy that had recently emerged from recession.
Despite the downward revision for the full year, the OeNB perceives more favorable conditions in the second half of 2026. Its short-term indicator indicates GDP growth of 0.1% in Q3 and 0.3% in Q4. The central bank highlighted that global trade has outperformed earlier expectations, with Austrian exports gaining momentum. Additionally, industrial order books and business sentiment have shown improvement since the bank’s June forecast.
2027 growth forecast upgraded amid improved prospects
The improved outlook for the latter half of 2026 has led the central bank to raise its forecast for 2027. The OeNB now projects a 1.3% expansion next year, up from the 1.1% predicted in its June forecast. The forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth rate in 2025 after two recession years, but the recovery has been modest due to higher energy costs and challenging international circumstances.
Furthermore, the central bank has factored in the economic impact of Austria’s summer drought into its latest assessment. It estimates that the drought will reduce economic growth by roughly 0.1 percentage points in 2026. OeNB Governor Martin Kocher stated that industrial orders and sentiment had improved since June despite the difficult environment. The bank added that these developments, along with stronger global trade, contributed to the improved outlook for the second half of 2026 and the upward revision for 2027.
Inflation forecast for 2026 lowered
The OeNB has also decreased its inflation outlook for Austria. It now anticipates the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from its June estimate of 3.2%. The central bank projects inflation rates of 2.3% in 2027 and 2.2% in 2028. Its previous June projections indicated 2.4% for 2027 and 2.1% for 2028. The latest figures suggest that inflation will decline, as elevated energy costs influenced prices throughout 2026.
The September forecast shows Austria experiencing modest growth this year, with a faster expansion expected in 2027. The 2026 growth estimate of 0.5% aligns with the forecast made by the central bank in March. The June update increased this estimate to 0.6%, before weaker first-half data prompted the recent downward revision. The OeNB’s updated projections for 2026 through 2028 incorporate recent economic data, international conditions, and its latest short-term outlook.