VIENNA, AUSTRIA / RankWire.AI / – In its latest assessment, Austria’s central bank has revised downward its forecast for 2026 economic growth, citing weaker activity in the first half of the year. The Oesterreichische Nationalbank now anticipates a real gross domestic product increase of 0.5% for 2026, a slight decrease from its June estimate of 0.6%. The bank explained that this 0.1 percentage point reduction reflects weaker economic performance during the initial six months of 2026 than previously reported.
Data from Statistics Austria showed that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline interrupted a streak of six straight quarters of positive growth. Despite this, GDP remained 0.4% higher than in the same quarter last year, contrasting with the 0.8% annual growth seen in Q1. According to Statistics Austria, the rise in energy prices hindered economic output during the second quarter, adding pressure to an economy that had recently emerged from recession.
Looking ahead, the OeNB foresees a more favorable environment in the latter half of 2026 despite the overall downward revision for the year. Its short-term indicator indicates GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank highlighted that global trade has outperformed previous expectations, and Austrian exports of goods are gaining momentum. Additionally, industrial order books and business sentiment have seen improvements since the bank’s June forecast.
2027 Growth Forecast Sees Upward Revision
The improved outlook for the second half of 2026 has prompted the central bank to raise its forecast for 2027. The OeNB now expects Austria’s economy to grow by 1.3% in 2027, compared to 1.1% predicted in June. The forecast for 2028 remains steady at 1.2%. After experiencing 0.7% growth in 2025 following two recession years, Austria’s recovery has stayed muted amid higher energy costs and challenging international circumstances.
Furthermore, the bank included the impact of Austria’s summer drought in its latest evaluation. It estimates that the drought will trim about 0.1 percentage points from economic growth in 2026. OeNB Governor Martin Kocher noted that, despite the tough conditions, industrial orders and business sentiment have improved since June. The bank pointed out that these developments, combined with stronger global trade, contributed to the more optimistic outlook for the latter half of 2026 and to the upgraded forecast for 2027.
Inflation Outlook for 2026 Reduced
The OeNB also adjusted its inflation forecast downward for Austria. It now projects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, a decline from its June estimate of 3.2%. For 2027, the bank anticipates inflation at 2.3%, and for 2028 at 2.2%. The previous projections in June had placed these rates at 2.4% for 2027 and 2.1% for 2028. The latest figures indicate a downward trend in inflation, influenced by elevated energy prices that affected prices throughout 2026.
The September forecast suggests Austria will experience modest growth this year, with a faster expansion expected in 2027. The 2026 projection of 0.5% also restores the growth outlook to the level forecasted by the central bank in March. The June revision had increased this estimate to 0.6%, but weaker first-half data prompted the recent downward adjustment. The OeNB’s updated projections now span 2026 through 2028, incorporating recent economic data, international conditions, and its latest short-term analysis.