VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank has revised downward its forecast for Austria’s economic expansion in 2026, citing a weaker start to the year. The central bank now predicts a 0.5% increase in gross domestic product for 2026, compared to its June estimate of 0.6%. The adjustment follows softer economic activity observed during the initial half of the year. Austria’s economy is recovering after returning to growth in 2025, following two years of recession.
Official figures indicate that Austria’s economy shrank by 0.1% in the second quarter relative to the first three months of the year. This marked the end of six consecutive quarters of quarterly growth. Statistics Austria reported that GDP still increased by 0.4% compared to the same period in the previous year. In the first quarter, annual growth was 0.8%. During the second quarter, rising energy prices dampened economic activity, exerting additional pressure on the country’s modest recovery.
The central bank anticipates that economic momentum will strengthen in the latter half of 2026. Its latest short-term outlook suggests quarterly GDP growth of 0.1% in the third quarter, with potential growth of 0.3% in the fourth quarter under the bank’s baseline scenario. The OeNB highlighted factors such as increased global trade, improved industrial orders, and more optimistic business sentiment. Additionally, Austria’s exports of goods have gained momentum compared to earlier in the year.
Economic growth outlook improves for 2027
The brighter forecast for the second half of 2026 has prompted the bank to raise its projections for the following year. Austria’s economy is now expected to grow by 1.3% in 2027. This is an upward revision from the 1.1% growth forecast published in June. The forecast for 2028 remains unchanged at 1.2%. In 2025, Austria experienced a 0.7% growth rate, ending two years of contraction but maintaining a relatively moderate pace of recovery.
Weather conditions also influenced the central bank’s recent economic outlook. The OeNB estimates that Austria’s summer drought will reduce 2026 growth by roughly 0.1 percentage points. Governor Martin Kocher pointed to stronger industrial orders and improved sentiment since the June forecast. The bank also recognized support from enhanced international trade. These factors contributed to the upgraded projections for the latter half of 2026 and the increased forecast for 2027.
Inflation forecast lowered
Austria’s inflation expectations were also adjusted in the September forecast. The central bank now projects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from the 3.2% forecasted in June. For 2027, inflation is expected to be 2.3%, followed by 2.2% in 2028, compared to previous estimates of 2.4% and 2.1%, respectively. These revised figures reflect the bank’s latest assessment of domestic price trends and broader economic conditions.
The September revisions suggest Austria will experience limited growth in 2026, with a more robust expansion forecasted for the following year. The new 0.5% growth estimate aligns with the central bank’s projection made in March. It was raised to 0.6% in June before weaker first-half data led to this latest adjustment. The forecast now covers 2026 through 2028, incorporating recent GDP data, trade developments, inflation trends, and the bank’s updated short-term economic indicators.