VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank, Oesterreichische Nationalbank, has revised its 2026 economic growth forecast downward following weaker activity observed during the first half of the year. The bank now anticipates real gross domestic product to grow by 0.5% in 2026, contrasting with its June projection of 0.6%. The downgrade by 0.1 percentage points reflects a less favorable economic performance during the initial six months, as reported by the bank.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous quarter. This decline interrupted a streak of six consecutive quarters of positive growth. Despite the contraction, GDP remained 0.4% higher than the same period last year, with the first quarter recording an 0.8% year-over-year increase. Statistics Austria cited higher energy prices as a factor weighing on economic output during the quarter, adding pressure to an economy that had recently emerged from recession.
The OeNB foresees better conditions in the latter half of 2026 despite the overall downward revision for the year. Its short-term indicator suggests GDP will grow by 0.1% in the third quarter and by 0.3% in the fourth. The bank highlighted that global trade has performed better than previously expected, with Austrian exports gaining momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast.
2027 Growth Forecast Shows Improvement
As a result of the more optimistic second-half outlook, the central bank has increased its forecast for 2027. The OeNB now projects a 1.3% expansion next year, up from 1.1% in its June estimate. The forecast for 2028 remains unchanged at 1.2%. Austria’s economy grew by 0.7% in 2025 following two years of recession, but the pace of recovery has remained subdued amid higher energy costs and challenging international conditions.
The central bank’s latest assessment also accounts for the economic impact of Austria’s summer drought. It estimates the drought will reduce growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher noted that despite difficult conditions, industrial orders and sentiment have improved since June. The bank pointed out that these developments, along with stronger global trade, have contributed to the brighter outlook for the second half of 2026 and the increased 2027 forecast.
Inflation Prediction for 2026 Is Lowered
The OeNB has also lowered its inflation outlook for Austria. It now expects the Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, compared to its June estimate of 3.2%. The bank’s projections for 2027 and 2028 are 2.3% and 2.2%, respectively, with June estimates at 2.4% for 2027 and 2.1% for 2028. The recent figures suggest inflation will decline after elevated energy costs influenced prices during 2026.
The September forecast indicates a modest growth trajectory for Austria in 2026, with a more accelerated pace expected in 2027. The 0.5% growth projection for 2026 brings the outlook back in line with the bank’s March forecast. The June update had increased that estimate to 0.6%, but weaker data from the first half prompted the latest downward revision. The OeNB’s updated projections for 2026 to 2028 incorporate recent economic data, international conditions, and its latest short-term outlook.