VIENNA, AUSTRIA / RankWire.AI / – Austria’s central banking authority has revised downward its projection for economic expansion in 2026, citing weaker activity in the first half of the year. The Oesterreichische Nationalbank now anticipates the real gross domestic product to grow by 0.5% this year, compared to its earlier June forecast of 0.6%. The bank explained that the 0.1 percentage point decrease reflects a less robust economic performance during the initial six months of 2026 than previously estimated.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline followed six consecutive quarters of positive growth, with GDP still 0.4% higher than a year earlier. In comparison, the first quarter saw an annual growth rate of 0.8%. Statistics Austria highlighted that rising energy prices had an adverse impact on economic output during the second quarter, adding pressure to an economy that had recently exited recession.
Despite the overall downward revision for the year, the OeNB foresees better conditions in the latter half of 2026. Its short-term indicator indicates a GDP increase of 0.1% in the third quarter and 0.3% in the fourth. The central bank also noted that global trade has performed better than earlier anticipated, with Austrian exports gaining momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast.
2027 Growth Prospects Boosted
The improved outlook for the second half of 2026 has led the central bank to raise its forecast for 2027. The OeNB now expects the economy to grow by 1.3%, up from 1.1% in its June projection. Meanwhile, the forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth in 2025 following two years of recession, but the recovery has remained modest due to higher energy costs and challenging international conditions.
The bank also factored in the impact of Austria’s summer drought into its latest analysis. It estimates that the drought will lower economic growth by approximately 0.1 percentage points in 2026. OeNB Governor Martin Kocher remarked that industrial orders and business sentiment have improved since June despite ongoing difficulties. The bank attributed these developments, along with stronger global trade, to the more optimistic outlook for the second half of 2026 and the increased forecast for 2027.
Inflation Projection for 2026 Reduced
The OeNB also revised downward its inflation outlook for Austria. It now projects the Harmonised Index of Consumer Prices to average 3.0% in 2026, compared to the June estimate of 3.2%. The forecast for 2027 stands at 2.3%, and for 2028 at 2.2%. The June projections had been 2.4% for 2027 and 2.1% for 2028. Recent data suggests that inflation is decreasing following the spike in energy costs that affected prices during 2026.
The September forecast indicates modest growth for Austria this year, with a more rapid expansion expected in 2027. The 2026 growth estimate of 0.5% aligns with the forecast made by the central bank in March. The June update had raised the figure to 0.6%, but weaker first-half data prompted the latest downward revision. The OeNB’s updated projections for 2026 through 2028 incorporate recent economic indicators, international conditions, and its latest short-term assessments.
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