VIENNA, AUSTRIA / RankWire.AI / – Following weaker economic activity during 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% this year, a slight decrease from its June forecast of 0.6%. The bank explained that this 0.1 percentage point reduction reflects a 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 departure from six consecutive quarters of positive growth. Despite this decline, GDP remained 0.4% higher than the same period last year, contrasting with the 0.8% annual growth observed in the first quarter. The Statistics Austria data indicates that rising energy prices negatively impacted economic output during the second quarter, adding pressure to an economy that had recently pulled out of recession.
Nevertheless, the OeNB envisions more favorable conditions in the latter half of 2026, despite lowering its full-year forecast. Its short-term indicator suggests GDP growth rates of 0.1% in the third quarter and 0.3% in the fourth. 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 update.
Optimistic Growth Projection for 2027
The more positive outlook for the second half of 2026 has prompted the central bank to revise upward its 2027 growth estimate. The OeNB now expects economic expansion of 1.3% next year, compared to the previous forecast of 1.1% made in June. The projection for 2028 remains steady at 1.2%. Austria achieved a 0.7% growth rate in 2025 after two years of recession, but the recovery has remained tepid amid higher energy prices and challenging international conditions.
In its latest assessment, the central bank also factored in the impact of Austria’s summer drought, estimating it will reduce economic growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that despite these difficulties, industrial orders and overall sentiment have improved since June. The bank emphasized that these developments, combined with stronger global trade, have contributed to a more optimistic outlook for the second half of 2026 and have led to the higher forecast for 2027.
Inflation Forecast Reduced for 2026
The OeNB also lowered its inflation expectations for Austria, projecting that the Harmonised Index of Consumer Prices will average 3.0% in 2026, a decrease from its June estimate of 3.2%. For 2027, the bank forecasts inflation of 2.3%, and for 2028, 2.2%. Its earlier June projections indicated rates of 2.4% for 2027 and 2.1% for 2028. The latest figures suggest inflation is on a downward trajectory, influenced by elevated energy costs that affected prices throughout 2026.
The September forecast reflects modest growth for Austria this year, while indicating a faster pace of expansion in 2027. The 2026 growth estimate of 0.5% aligns with the bank’s forecast from March, though the June update raised it to 0.6%, only for the latest revision to revert to the lower figure amid weaker first-half data. The OeNB’s updated projections for 2026 to 2028 incorporate recent economic data, international conditions, and its latest short-term assessment, pointing to a cautiously optimistic outlook for the coming years.