VIENNA, AUSTRIA / RankWire.AI / – In Vienna this week, Austria’s central bank has adjusted its economic projections for the upcoming years, citing recent activity data. The Oesterreichische Nationalbank has lowered its forecast for 2026 real gross domestic product growth to 0.5%, a slight decrease from its June estimate of 0.6%. The bank explained that the 0.1 percentage point reduction reflects a weaker economic performance during the first half of 2026 than previously reported, citing slower activity in the initial months.
Statistics Austria reports that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, ending a streak of six straight quarters of growth. Despite this decline, GDP was still 0.4% higher than the same period last year. The first quarter saw an annual growth rate of 0.8%. Higher energy prices negatively impacted economic output in the second quarter, according to Statistics Austria. This added to pressures on an economy that had recently recovered from recession.
Looking ahead, the OeNB remains optimistic about the second half of 2026. Its short-term indicator projects a 0.1% growth rate in Q3 and 0.3% in Q4. The bank highlighted that global trade has outperformed earlier expectations and that Austria’s exports of goods are gaining momentum. Additionally, industrial order books and business sentiment have improved since the central bank released its June forecast, indicating a more positive outlook for the latter half of the year.
Forecast for 2027 Shows Signs of Strengthening
The improved second-half outlook has led the central bank to boost its growth forecast for 2027. The OeNB now anticipates a 1.3% increase in GDP next year, up from 1.1% in its June projection. The estimate for 2028 remains unchanged at 1.2%. After experiencing 0.7% growth in 2025 following two years of recession, Austria’s economic recovery continues to be moderate, hindered by higher energy costs and challenging international conditions.
The latest forecast also factors in the economic impact of Austria’s summer drought. The bank estimates that the drought will decrease growth by roughly 0.1 percentage point in 2026. OeNB Governor Martin Kocher noted that despite difficult conditions, industrial orders and business sentiment have improved since June. The bank said these positive developments, along with stronger global trade, have contributed to the revised outlook for the second half of 2026 and the elevated forecast for 2027.
Inflation Projection for 2026 Is Reduced
The OeNB also downgraded its inflation outlook for Austria. The central bank now expects the Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, a decline from its June estimate of 3.2%. For 2027, inflation is projected at 2.3%, and for 2028, at 2.2%. Previously, the June forecasts indicated 2.4% for 2027 and 2.1% for 2028. The recent figures suggest inflation is on a downward trend, partly due to the high energy costs that influenced prices throughout 2026.
The September forecast indicates modest growth for Austria this year but foresees a faster expansion in 2027. The 2026 growth estimate of 0.5% aligns with the central bank’s forecast from March, whereas the June update had increased that to 0.6% before recent weaker first-half data prompted the latest downward revision. The OeNB’s revised projections for 2026 to 2028 incorporate recent economic data, international developments, and its latest short-term analysis.