VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has revised its 2026 economic growth forecast downward after observing weaker activity in the first half of the year. The Oesterreichische Nationalbank now anticipates a real gross domestic product increase of 0.5% in 2026. This is a decrease from its June projection of 0.6%. The bank explained that the 0.1 percentage point cut reflects a weaker economic performance during the first six months of 2026 than previously reported.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline followed six straight quarters of growth. Despite this, GDP was still 0.4% higher than a year earlier. In the first quarter, annual growth stood at 0.8%. Statistics Austria indicated that rising energy costs dampened economic output in the second quarter. This added pressure to an economy that had recently emerged from recession.
The OeNB maintains a more optimistic view for the second half of 2026 despite the overall downgrade. Its short-term indicator suggests GDP will grow by 0.1% in the third quarter and 0.3% in the fourth. The bank noted that global trade has performed better than expected. Exports from Austria are gaining momentum. Additionally, industrial order books and business sentiment have improved since the bank’s June forecast.
2027 Growth Outlook Gets an Upgrade
The better second-half prospects have led the central bank to boost its 2027 growth forecast. The OeNB now predicts 1.3% growth next year, up from 1.1% in June. Its estimate 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 slow. Elevated energy costs and challenging international conditions have kept growth subdued.
The central bank also factored in the economic impact of Austria’s summer drought in its latest analysis. It estimates the drought will cut about 0.1 percentage points from economic growth in 2026. OeNB Governor Martin Kocher said industrial orders and sentiment had improved since June, despite tough conditions. The bank stated that these developments, along with stronger global trade, contributed to a more positive outlook for the second half of 2026 and the higher 2027 forecast.
Inflation Forecast for 2026 Is Lowered
The OeNB also reduced its inflation expectations for Austria. It now projects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from its June estimate of 3.2%. For 2027, inflation is forecasted at 2.3%, and for 2028 at 2.2%. The June projections had been 2.4% for 2027 and 2.1% for 2028. The latest figures suggest inflation is on a downward trend following high energy prices that affected costs throughout 2026.
The September forecast presents a modest growth outlook for 2026 but expects a quicker expansion in 2027. The 2026 growth estimate of 0.5% aligns with the forecast made by the central bank in March. The June update had increased this to 0.6%, but weaker first-half data prompted the latest downward revision. The OeNB’s new projections now span 2026 through 2028, incorporating recent economic data, international conditions, and its latest short-term assessment.