VIENNA, AUSTRIA / RankWire.AI / – The central bank of Austria has adjusted its economic growth forecast for 2026 downward following weaker performance in the first half of the year. According to the Oesterreichische Nationalbank, the country’s real gross domestic product is now expected to grow by 0.5% this year, a slight decrease from the 0.6% projection made in June. The bank explained that the 0.1 percentage point cut reflects weaker economic activity during the first six months 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, breaking a streak of six consecutive quarters of growth. Despite this contraction, GDP was still 0.4% higher than the same quarter of the previous year, compared to 0.8% annual growth in the first quarter. The Statistics Austria highlighted that rising energy prices weighed heavily on economic output during the second quarter, putting additional pressure on an economy that had recently pulled out of recession.
The OeNB remains optimistic about the second half of 2026, despite its downward revision for the full year. Its short-term indicator indicates a GDP increase of 0.1% in the third quarter and 0.3% in the fourth quarter. The central bank also noted that international trade has performed better than initially expected. Exports of Austrian goods have gained further momentum, and both industrial order books and business sentiment have improved since the bank’s June forecast.
2027 growth outlook upgraded
The more positive outlook for the latter half of 2026 has led the central bank to raise its growth forecast for 2027. The OeNB now anticipates a 1.3% increase in economic activity next year, up from the 1.1% forecast in June. The projection for 2028 remains unchanged at 1.2%. Austria achieved a 0.7% growth rate in 2025 after two recession years, but the recovery has been subdued, impacted by higher energy prices and challenging international circumstances.
The latest assessment also factors in the effects of Austria’s summer drought. The bank estimates that the drought will reduce economic growth by approximately 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 stated that these developments, along with stronger global trade, contributed to the upgraded outlook for the second half of 2026 and the increased forecast for 2027.
Inflation forecast for 2026 adjusted downward
The OeNB also revised its inflation outlook for Austria. It now expects the Harmonised Index of Consumer Prices to rise by an average of 3.0% in 2026, down from its June estimate of 3.2%. The central bank projects inflation rates of 2.3% in 2027 and 2.2% in 2028, compared to previous projections of 2.4% and 2.1%, respectively. These figures indicate a declining inflation trend, following elevated energy costs that influenced prices during 2026.
The September forecast maintains a modest growth outlook for Austria in 2026, while projecting a quicker expansion in 2027. The 0.5% growth estimate for 2026 aligns with the central bank’s forecast from March, after the June update increased it to 0.6%. The recent weaker first-half data prompted the latest downward revision. The OeNB’s updated projections for 2026 through 2028 incorporate recent economic data, international developments, and its latest short-term assessments.