VIENNA, AUSTRIA / RankWire.AI / – Following a slowdown in activity during the initial half of the year, Austria’s central bank has revised downward its 2026 economic growth outlook. The Oesterreichische Nationalbank now anticipates a 0.5% increase in real gross domestic product for this year, a slight decrease from the 0.6% forecast made in June. The bank explained that the 0.1 percentage point reduction reflects weaker economic performance observed during the first 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. This decline came after six consecutive quarters of positive growth. Despite this contraction, GDP was still 0.4% higher than the same period last year, which is a slowdown compared to the 0.8% annual growth in the first quarter. The Statistics Austria noted that rising energy prices pressured economic output in the second quarter, adding strain to an economy that had recently pulled out of recession.
Looking ahead, the OeNB expects more favorable conditions in the second half of 2026 despite lowering its full-year forecast. Its short-term indicator predicts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank highlighted that global trade has performed better than initially expected, with Austrian exports gaining momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast.
Improved Growth Outlook for 2027
The improved prospects for the latter half of 2026 have led the central bank to raise its forecast for 2027. The OeNB now projects economic expansion of 1.3% next year, up from its June estimate of 1.1%. For 2028, the forecast remains unchanged at 1.2%. Austria’s economy grew by 0.7% in 2025 after two years of recession, but the recovery has been modest amid higher energy costs and challenging international circumstances.
The latest assessment also takes into account the economic impact of Austria’s summer drought. The bank estimates that the drought will reduce economic growth by roughly 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that despite difficult conditions, industrial orders and business sentiment have shown improvement since June. The bank indicated that these developments, together with stronger global trade, contributed to the more optimistic outlook for the second half of 2026 and the upward revision for 2027.
2026 Inflation Forecast Trimmed
In addition to lowering its growth forecast, the OeNB has also reduced its inflation projection for Austria. It now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from its June estimate of 3.2%. For the subsequent years, the bank forecasts inflation of 2.3% in 2027 and 2.2% in 2028, with June projections at 2.4% and 2.1%, respectively. The updated figures suggest that inflation is on a downward trend following elevated energy prices impacting prices in 2026.
The September forecast indicates a modest growth trajectory for Austria in 2026, with a faster expansion projected for 2027. The 0.5% growth forecast for 2026 matches the central bank’s estimate from March. The June update had increased that estimate to 0.6%, but weaker first-half data prompted this latest downward revision. The OeNB’s new forecasts for 2026 through 2028 incorporate recent economic data, international conditions, and its latest short-term assessments.