VIENNA, AUSTRIA / RankWire.AI / – The central banking authority of Austria has adjusted its forecast for the country’s economic growth in 2026, citing weaker activity in the first half of the year. According to Oesterreichische Nationalbank, the expected increase in real gross domestic product (GDP) is now 0.5% for 2026, a slight decrease from the June projection of 0.6%. The bank attributed this 0.1 percentage point reduction to less robust economic performance during the initial six months of the year.
Statistics Austria reported that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This downturn interrupted a streak of six consecutive quarters of positive growth. Despite the contraction, GDP was still 0.4% higher than the same period last year, down from a 0.8% annual growth rate in the first quarter. Statistics Austria highlighted that rising energy prices dampened economic output in the second quarter, adding pressure to an economy that had recently recovered from recession.
Despite the downward revision for the full year, the OeNB foresees improved conditions in the latter half of 2026. Its short-term indicator indicates a GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank noted that global trade has outperformed previous expectations, and Austrian exports of goods have accelerated. Additionally, industrial order books and overall business sentiment have shown improvements since the bank’s June forecast.
2027 Growth Outlook Elevated Amid Optimism
The improved outlook for the latter half of 2026 has led the central bank to increase its growth forecast for 2027. The OeNB now projects a 1.3% expansion in 2027, up from its June estimate of 1.1%. The forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% increase in economic activity in 2025 after two recession years, but the pace of recovery has been modest amid elevated energy prices and challenging international conditions.
The latest assessment also accounts for the economic impact of Austria’s summer drought. The central bank estimates that this drought will cut approximately 0.1 percentage points from the growth rate in 2026. OeNB Governor Martin Kocher stated that, despite tough conditions, industrial orders and business sentiment have improved since June. These developments, combined with stronger global trade, have contributed to the more positive outlook for the second half of 2026 and the upward revision for 2027.
Inflation Forecast for 2026 Reduced
The OeNB has also lowered its inflation projections 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%. The forecast for 2027 has been set at 2.3%, and for 2028 at 2.2%. The June projections indicated rates of 2.4% for 2027 and 2.1% for 2028. The recent figures suggest inflation is on a declining trajectory following elevated energy costs that influenced prices throughout 2026.
The September forecast portrays a modest growth path for Austria in 2026, with a more rapid expansion anticipated in 2027. The 0.5% growth estimate for 2026 aligns with the forecast made by the central bank in March. The June update increased the projection to 0.6%, but weaker data from the first half of the year prompted the recent downward revision. The OeNB’s new projections for 2026 through 2028 incorporate recent economic data, global conditions, and its latest short-term assessments.