VIENNA, AUSTRIA / RankWire.AI / – Following a period of weaker economic activity during the first half of the year, Austria’s central bank has adjusted its 2026 economic growth forecast downward. The Oesterreichische Nationalbank now anticipates the real gross domestic product to grow by 0.5% in 2026, a slight decrease from its June projection of 0.6%. This 0.1 percentage point reduction reflects the weaker economic performance reported during the initial six months of the year.
Statistics Austria reported that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline interrupted six straight quarters of positive growth, although GDP still was 0.4% higher than a year earlier. The first quarter saw an annual growth rate of 0.8%. Higher energy prices negatively impacted economic output in the second quarter, according to Statistics Austria, adding strain to an economy that had recently exited recession.
Despite lowering its full-year forecast, the OeNB expects a more favorable second half of 2026. Its short-term indicator predicts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank noted that global trade has outperformed earlier expectations, and Austrian exports have gained momentum. Since the June forecast, industrial order books and business sentiment have shown improvement, suggesting positive developments since then.
Better Growth Prospects for 2027 Lead to Increased Forecast
The improved outlook for the latter part of 2026 has prompted the central bank to raise its projections for 2027. The OeNB now forecasts economic growth of 1.3% next year, up from 1.1% in its June estimate. The forecast for 2028 remains at 1.2%. Austria experienced 0.7% growth in 2025 after two recessionary years, but the recovery has been muted due to higher energy costs and challenging international conditions.
The latest assessment also considers the economic impact of Austria’s summer drought, which is estimated to decrease growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that industrial orders and sentiment have improved since June despite ongoing difficulties. The bank indicated that these positive changes, combined with stronger global trade, contributed to the more optimistic outlook for the second half of 2026 and the upward revision for 2027.
Inflation Forecast for 2026 Is Reduced
In addition, the OeNB lowered its inflation projection for Austria. It now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, which is below its June forecast of 3.2%. The central bank’s outlook for 2027 is 2.3%, and for 2028, 2.2%. These latest estimates suggest a declining inflation trend after elevated energy prices affected consumer prices throughout 2026. The June projections had been 2.4% for 2027 and 2.1% for 2028.
The September forecast indicates that Austria will experience modest growth this year, with a quicker expansion anticipated in 2027. The 0.5% growth forecast for 2026 aligns with the central bank’s prediction made in March. The June update had increased that estimate to 0.6%, but weaker first-half data prompted the recent downward adjustment. The OeNB’s new projections for 2026 through 2028 incorporate recent economic data, international conditions, and its latest short-term evaluation.