VIENNA, AUSTRIA / RankWire.AI / – In a recent update, Austria’s central bank has lowered its forecast for the country’s economic growth for 2026, citing sluggish activity during the initial half of the year. The Oesterreichische Nationalbank now anticipates a real gross domestic product increase of 0.5% for this year, down from its June prediction of 0.6%. The bank explained that the 0.1 percentage point cut reflects weaker economic performance in the first six months of 2026 than previously reported.
Based on data from Statistics Austria, Austria’s economy contracted by 0.1% in the second quarter relative to the previous three months. This decline followed six straight quarters of positive growth, although GDP was still 0.4% higher than a year earlier. In comparison, the first quarter saw an annual growth rate of 0.8%. Statistics Austria attributed the second-quarter slowdown to rising energy prices, which added pressure to an economy that had recently moved out of recession.
Despite the downward revision for the full year, the OeNB anticipates more favorable 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 have gained momentum. Moreover, industrial order books and business sentiment have shown improvement since the bank’s June forecast.
2027 Growth Forecast Receives Upgrade Amid Improved Outlook
The positive momentum expected in the second half of 2026 has led the central bank to boost its forecast for 2027. The OeNB now predicts economic expansion of 1.3% next year, compared with the 1.1% forecast in June. Its estimate for 2028 remains unchanged at 1.2%. After experiencing 0.7% growth in 2025 following two years of recession, Austria’s economic recovery has been relatively modest, hampered by higher energy costs and challenging international conditions.
Additionally, the central bank has factored in the economic impact of Austria’s summer drought into its latest assessment. It estimates that the drought will reduce economic growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher mentioned that despite difficult circumstances, industrial orders and overall sentiment have improved since June. The bank states that these developments, along with stronger global trade, have contributed to the more optimistic outlook for the second half of 2026 and the upward revision for 2027.
Inflation Projection for 2026 Revised Downward
The OeNB also adjusted its inflation forecast for Austria downward. It now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, a reduction from its June estimate of 3.2%. For 2027, inflation is projected at 2.3%, and for 2028, at 2.2%. The earlier June projections indicated rates of 2.4% for 2027 and 2.1% for 2028. These recent figures suggest a downward trend for inflation, as elevated energy costs influenced prices throughout 2026.
The September forecast presents a scenario where Austria experiences modest growth this year but anticipates a quicker expansion in 2027. The 2026 growth estimate of 0.5% aligns with the forecast made by the central bank in March. The June update had increased this to 0.6%, but weaker first-half data prompted the latest downward adjustment. The OeNB’s updated projections span from 2026 through 2028, taking into account recent economic data, international developments, and its latest short-term assessments.