VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has revised downward its 2026 economic growth outlook following weaker activity in the first half of the year. The Oesterreichische Nationalbank now predicts a 0.5% expansion in real gross domestic product this year, down from its June forecast of 0.6%. The bank explained that the 0.1 percentage point cut is due to weaker economic performance reported during the first six months of 2026.
Statistics Austria reported that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, marking a decline after six quarters of growth. Despite this, GDP was still 0.4% higher than a year earlier, compared to 0.8% growth in the first quarter. Higher energy prices were cited by Statistics Austria as a contributing factor to the second quarter’s slowdown, adding pressure to an economy that recently exited recession.
The OeNB anticipates better conditions in the latter half of 2026 despite lowering its annual forecast. Its short-term indicator suggests GDP will grow by 0.1% in Q3 and 0.3% in Q4. The central bank noted that global trade has outperformed expectations and Austrian exports have gained momentum. Additionally, industrial orders and business confidence have improved since the bank’s June forecast.
Growth Projections for 2027 Are Upgraded
The improved outlook for the second half of 2026 has led the central bank to increase its forecast for 2027. The OeNB now estimates economic growth of 1.3% next year, up from 1.1% in its June projection. The forecast for 2028 remains unchanged at 1.2%. Austria’s economy grew by 0.7% in 2025 after two recession years, but the recovery has been modest amid rising energy costs and challenging international conditions.
The bank also factored in the economic impact of Austria’s summer drought into its latest forecast, estimating it will cut growth by about 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that industrial orders and sentiment had improved since June despite ongoing difficulties. These developments, along with stronger global trade, contributed to the brighter second-half outlook and the higher forecast for 2027.
2026 Inflation Forecast Slightly Lowered
The OeNB also reduced its inflation estimate for Austria. It now expects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, down from its June estimate of 3.2%. For 2027, the central bank projects inflation at 2.3%, and 2.2% for 2028. Its June projections had been 2.4% for 2027 and 2.1% for 2028. Recent figures suggest inflation is on a downward trend following elevated energy costs during 2026.
The September forecast indicates moderate growth for Austria in 2026, with a quicker pace expected in 2027. The 0.5% growth forecast for 2026 aligns with the central bank’s March estimate, which was raised to 0.6% in June before the weaker first-half data prompted this latest revision. The OeNB’s new forecasts span 2026 to 2028, factoring in recent economic developments, international conditions, and its latest short-term outlook.