VIENNA, AUSTRIA / RankWire.AI / – Following weaker economic activity in the first half of the year, Austria’s central bank has adjusted its 2026 economic growth projection downward. The Oesterreichische Nationalbank now anticipates a real gross domestic product increase of 0.5% for this year, compared to its earlier June forecast which predicted 0.6%. The bank explained that the 0.1 percentage point reduction reflects the weaker-than-expected economic performance during the initial six months of 2026.
Statistics Austria reports that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, marking a decline after six successive quarters of positive growth. Despite this contraction, GDP was still 0.4% higher than the same period last year, contrasting with the 0.8% annual growth registered in the first quarter. According to Statistics Austria, the rise in energy prices negatively impacted economic output during the second quarter, adding pressure to an economy that had recently emerged from a recession.
The OeNB maintains a more optimistic outlook for the latter half of 2026 despite the overall downward revision for the year. Its short-term indicator forecasts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank pointed out that global trade has performed better than previously anticipated, and Austrian exports of goods have gained momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast, supporting a more positive outlook for the upcoming months.
2027 Growth Outlook Elevated Following Stronger Second Half
The improved prospects for the second half of 2026 have led the central bank to raise its forecast for 2027. The OeNB now estimates that Austria’s economy will grow by 1.3% next year, up from its June projection of 1.1%. The forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth in 2025 after two years of recession, but the recovery has been modest amid rising energy costs and challenging international circumstances.
Furthermore, the central bank has incorporated the potential impact of Austria’s summer drought into its latest assessment, estimating it 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 adverse conditions. The bank attributed these developments, along with stronger global trade, to the more positive outlook for the second half of 2026 and the upward revision of the 2027 growth forecast.
Inflation Forecast for 2026 Is Reduced
The OeNB has also lowered its inflation expectations for Austria. It now projects an average Harmonised Index of Consumer Prices inflation of 3.0% in 2026, a decrease from the June estimate of 3.2%. For 2027, the bank anticipates inflation at 2.3%, and for 2028, at 2.2%, with the June forecasts previously set at 2.4% and 2.1%, respectively. These figures suggest a declining inflation trend after elevated energy costs influenced prices throughout 2026.
The September forecast indicates modest growth for Austria this year but expects a quicker expansion in 2027. The 2026 growth forecast of 0.5% aligns with the central bank’s prediction from March, while the June update had increased it to 0.6% before weaker first-half data prompted the recent downward revision. The OeNB’s latest projections extend through 2028, incorporating recent economic data, global conditions, and its latest short-term analysis.