VIENNA, AUSTRIA / RankWire.AI / – Following a weaker first half of 2026, Austria’s central bank has adjusted downward its forecast for the country’s economic growth in 2026. The Oesterreichische Nationalbank now anticipates a 0.5% increase in gross domestic product this year, compared to the June projection of 0.6%. This revision comes amid softer economic activity during the first six months. Austria’s economy continues its recovery after returning to growth in 2025 following two years of recession.
Data from Statistics Austria showed a 0.1% contraction in Austria’s economy in the second quarter compared to the previous three months, ending a streak of six consecutive quarters of growth. Despite this decline, GDP still increased by 0.4% year-over-year, with the first quarter’s growth at 0.8%. Higher energy prices negatively impacted economic activity during the quarter, adding pressure to the modest recovery.
The central bank expects that economic momentum will pick up in the latter half of 2026, with its latest short-term outlook indicating a quarterly GDP growth of 0.1% in the third quarter, followed by potentially reaching 0.3% in the fourth quarter under the bank’s baseline scenario. The OeNB highlighted stronger global trade, improving industrial orders, and more optimistic business sentiment as contributing factors. Exports of Austrian goods have also gained momentum compared to earlier conditions this year.
2027 Growth Forecast Upgraded
The improved outlook for the second half of 2026 has prompted the bank to raise its projection for 2027. Austria’s economy is now expected to grow by 1.3% next year, up from the earlier estimate of 1.1% published in June. The forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth rate in 2025, ending two years of contraction but maintaining a moderate pace of recovery overall.
Weather conditions also influenced the central bank’s recent economic outlook. The OeNB estimates that Austria’s summer drought will reduce 2026 economic growth by approximately 0.1 percentage points. Governor Martin Kocher noted that stronger industrial orders and improved sentiment since June’s forecast, along with the boost from better international trade, contributed to the bank’s more optimistic projections for the latter half of 2026 and the upward revision for 2027.
Inflation Forecast Adjusts Downward
Austria’s inflation outlook has also been revised downward in the September forecast. The central bank now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, compared to the 3.2% estimated in June. For 2027, inflation is projected at 2.3%, and for 2028 at 2.2%, with previous forecasts at 2.4% and 2.1%, respectively. These updated projections reflect the central bank’s latest assessment of domestic prices and broader economic conditions.
The September revision indicates that Austria will experience limited growth in 2026, with a stronger rebound expected next year. The new 0.5% growth forecast aligns with the central bank’s projection from March, after it raised its estimate to 0.6% in June before the weaker first-half data prompted the latest adjustment. The forecast now extends through 2026 to 2028, incorporating recent GDP figures, trade developments, inflation trends, and the bank’s updated short-term economic indicators.