VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has revised downward its 2026 economic growth forecast following weaker activity in the first half of the year. The Oesterreichische Nationalbank now anticipates real gross domestic product to increase by 0.5% this year. Its forecast from June had indicated 0.6%. The bank explained that the 0.1 percentage point reduction reflects a weaker economic performance than previously reported 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. This decline broke a streak of six consecutive quarters of positive growth. Despite this, GDP remained 0.4% higher than a year earlier, compared to 0.8% annual growth in the first quarter. Statistics Austria attributed the slowdown to rising energy prices, which dampened economic output during the second quarter, adding pressure to an economy that had recently emerged from recession.
Despite the full-year downgrade, the OeNB expects more favorable conditions in the latter half of 2026. Its short-term indicator indicates GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank noted that global trade has performed better than initially expected, and Austrian exports have gained momentum. Industrial order books and business sentiment have improved since the bank’s June forecast update.
Economic Growth Forecast for 2027 Is Raised
The more optimistic outlook for the second half of 2026 has led the central bank to increase its forecast for 2027. The OeNB now predicts a 1.3% growth rate next year, up from 1.1% in its June projection. For 2028, the forecast remains at 1.2%. Austria experienced 0.7% growth in 2025 after two recession years, but the recovery has remained subdued due to higher energy costs and challenging international circumstances.
The central bank’s latest assessment also factors in the economic impact of Austria’s summer drought. It estimates that the drought will cut about 0.1 percentage points from economic growth in 2026. OeNB Governor Martin Kocher stated that industrial orders and sentiment have improved since June despite ongoing difficulties. The bank emphasized that these positive developments, along with stronger global trade, have contributed to a more favorable outlook for the latter half of 2026 and the revised 2027 forecast.
Inflation Projection for 2026 Is Reduced
The OeNB has also lowered its inflation estimates for Austria. The projection for Harmonised Index of Consumer Prices inflation averages 3.0% in 2026, compared to its June estimate of 3.2%. For 2027, inflation is forecasted at 2.3%, and for 2028 at 2.2%. The earlier projections had indicated 2.4% for 2027 and 2.1% for 2028. The recent figures suggest inflation is on a declining trend following elevated energy costs that pushed prices higher during 2026.
The September forecast portrays Austria as experiencing modest growth this year, with a quicker expansion expected in 2027. The 2026 growth projection of 0.5% aligns with the central bank’s forecast from March. The June update initially raised the estimate to 0.6%, but weaker first-half data prompted the latest downward revision. The OeNB’s new forecasts for 2026 through 2028 incorporate recent economic data, international conditions, and its most recent short-term outlook.