VIENNA, AUSTRIA / RankWire.AI / – Following a sluggish first half of the year, Austria’s central monetary authority has reduced its forecast for economic expansion in 2026. The Oesterreichische Nationalbank now anticipates that the country’s gross domestic product will grow by 0.5% this year, down from its June projection of 0.6%. This downward revision reflects softer economic activity observed during the first six months of 2026. Austria’s economic recovery persists after rebounding in 2025, ending a two-year recession.
Official statistics revealed that Austria’s economy shrank by 0.1% in the second quarter compared with the previous three months, marking the end of six straight quarters of growth. Statistics Austria reported that the GDP increased by 0.4% year-on-year for the same period. The first quarter had seen a 0.8% growth. Elevated energy prices negatively impacted economic activity in the second quarter, adding pressure to the country’s modest recovery process.
The central bank anticipates that momentum will pick up during the latter half of 2026. Its latest short-term outlook indicates a quarterly GDP rise of 0.1% in the third quarter, with growth potentially reaching 0.3% in the fourth quarter based on the bank’s baseline scenario. The OeNB highlighted factors such as increased global trade, improved industrial orders, and more optimistic business sentiment. Additionally, Austria’s exports of goods have gained traction compared to earlier in the year.
2027 Growth Forecast Elevated Amid Improved Outlook
The more optimistic outlook for the second half of 2026 has prompted the central bank to revise its growth estimate for the following year. Austria’s economy is now projected to grow by 1.3% in 2027, an increase from the 1.1% forecast in June. Meanwhile, the forecast for 2028 remains steady at 1.2%. Austria’s economy expanded by 0.7% in 2025, ending two consecutive years of contraction but continuing to recover at a moderate pace.
Weather conditions have also influenced the central bank’s latest economic assessment. The OeNB estimates that the summer drought will reduce 2026 growth by approximately 0.1 percentage points. Governor Martin Kocher pointed to improvements in industrial orders and business sentiment since the June forecast, alongside support from enhanced international trade. These factors contributed to the bank’s more optimistic projections for the second half of 2026 and the elevated forecast for 2027.
Inflation Expectations Lowered in September
The inflation outlook for Austria was also revised downward in the September forecast. The central bank now projects that Harmonised Index of Consumer Prices inflation will average 3.0% in 2026, compared to the 3.2% estimated in June. For 2027, inflation is expected to be 2.3%, and for 2028, it is forecasted at 2.2%. These new projections reflect the central bank’s latest evaluation of domestic prices and broader economic conditions.
The revised outlook for 2026 indicates limited growth, followed by a more robust expansion in 2027. The new 0.5% growth forecast aligns with the projection made by the bank in March. It was increased to 0.6% in June before recent weaker data for the first half of the year prompted the latest downward adjustment. The forecast for 2026 to 2028 takes into account recent GDP figures, trade developments, inflation trends, and the bank’s updated short-term economic indicators.