VIENNA, AUSTRIA / RankWire.AI / – Following subdued economic activity during the initial half of the year, Austria’s central bank has revised downward its 2026 economic growth estimate. The Oesterreichische Nationalbank now predicts a 0.5% increase in real gross domestic product for this year, a slight decrease from the June forecast of 0.6%. The bank’s adjustment of 0.1 percentage points reflects weaker economic performance in the first half of 2026 than initially reported.
Statistics Austria reports that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline interrupted a streak of six consecutive quarters of positive growth, although GDP was still 0.4% higher than the same period last year. In comparison, the first quarter saw an annual growth rate of 0.8%. According to Statistics Austria, rising energy prices put downward pressure on economic output during the second quarter, further challenging an economy that had recently emerged from recession.
Despite the overall downgrade for the year, the OeNB anticipates more favorable conditions in the latter 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 has noted that global trade has outperformed previous expectations, boosting Austria’s exports. Improvements in industrial order books and business sentiment have been observed since the bank’s June forecast, contributing to an optimistic outlook for the second half of the year.
2027 Growth Forecast Sees Improvement
The enhanced prospects for the latter half of 2026 have led the central bank to upgrade its forecast for 2027. The OeNB now projects a 1.3% expansion for the upcoming year, up from the 1.1% estimated in June. The forecast for 2028 remains unchanged at 1.2%. After two years of recession, Austria experienced a 0.7% growth in 2025, but ongoing challenges such as higher energy costs and complex international conditions have kept the recovery subdued.
The latest assessment also accounts for the economic impact of Austria’s summer drought. The OeNB estimates that the drought will decrease growth by roughly 0.1 percentage points in 2026. OeNB Governor Martin Kocher mentioned that despite the tough conditions, industrial orders and business sentiment have improved since June. The bank explained that these positive developments, combined with stronger global trade, have contributed to the more optimistic second-half outlook and the increased forecast for 2027.
Inflation Forecast for 2026 Reduced
The OeNB also lowered its inflation projections for Austria. It now anticipates the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from the previous June estimate of 3.2%. The bank’s forecasts for 2027 and 2028 stand at 2.3% and 2.2%, respectively, compared to its earlier predictions of 2.4% and 2.1%. Recent data suggests that inflation is on a downward trajectory, influenced by elevated energy costs that affected prices during 2026.
The September forecast indicates that Austria will experience modest growth this year but expects a quicker expansion in 2027. The 0.5% growth forecast for 2026 aligns with the bank’s March projection, after the June estimate was raised to 0.6% prior to the weaker first-half data. The new projections, covering 2026 through 2028, incorporate recent economic data, international market conditions, and the latest short-term assessments made by the bank.