VIENNA, AUSTRIA / RankWire.AI / – After observing weaker activity during the first half of 2026, Austria’s central bank has revised downward its economic growth forecast for 2026. The Oesterreichische Nationalbank now anticipates a 0.5% increase in real gross domestic product this year, a slight decrease from its June estimate of 0.6%. The bank explained that the 0.1 percentage point cut reflects weaker economic performance during the first half of 2026 than previously reported.
Statistics Austria reported that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, ending a streak of six consecutive quarters of growth. Despite this contraction, GDP was still 0.4% higher than the same period last year, contrasting with the 0.8% annual growth in the first quarter. Statistics Austria attributed the slowdown to rising energy prices, which dampened economic output during the second quarter, adding pressure to an economy that had recently emerged from recession.
The OeNB remains optimistic about the second half of 2026, despite the full-year downgrade. Its short-term indicator predicts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank noted that global trade has performed better than expected, and Austrian exports of goods have gained momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast.
2027 Growth Outlook Is Upgraded
The positive outlook for the latter part of 2026 has led the central bank to raise its growth projection for 2027. The OeNB now estimates the economy will expand by 1.3% next year, up from its June forecast of 1.1%. Its prediction for 2028 remains at 1.2%. Austria achieved 0.7% growth in 2025 following two years of recession, but the recovery has been muted amid rising energy costs and challenging international conditions.
The central bank also factored in the economic impact of Austria’s summer drought into its latest assessment, estimating a reduction of about 0.1 percentage point in growth for 2026. OeNB Governor Martin Kocher stated that industrial orders and business sentiment have improved since June despite difficult circumstances. The bank highlighted that these developments, alongside stronger global trade, have contributed to the improved outlook for the second half of 2026 and the increased forecast for 2027.
Inflation Forecast for 2026 is Lowered
The OeNB also revised downward its inflation outlook for Austria, projecting the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from the June estimate of 3.2%. The bank’s forecasts for 2027 and 2028 stand at 2.3% and 2.2%, respectively, with the June projections at 2.4% for 2027 and 2.1% for 2028. These figures suggest inflation is on a downward trend following the impact of elevated energy costs on prices during 2026.
The September forecast indicates modest growth for Austria this year, with an acceleration expected in 2027. The 2026 growth estimate of 0.5% returns to the level forecasted by the central bank in March. The June update raised that estimate to 0.6%, but recent weaker first-half data led to the latest reduction. The OeNB’s updated projections for 2026 through 2028 incorporate recent economic data, international conditions, and its latest short-term assessment.