VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank, Austria’s central bank, has adjusted its economic projections for the country, lowering its growth forecast for 2026 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, compared to its June estimate of 0.6%. The revision reflects a 0.1 percentage point decrease, indicating a less robust economic performance in the initial six months of 2026.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter relative to the previous three months, marking a departure from six consecutive quarters of positive growth. Despite this quarterly contraction, GDP was still 0.4% higher than the same period last year, a slowdown from the 0.8% annual growth seen in the first quarter. Statistics Austria cited rising energy prices as a factor that weighed heavily on economic output in the second quarter, further straining an economy that had recently exited recession.
Notwithstanding the downward revision for the full year, the OeNB foresees more favorable conditions for the second half of 2026. Its short-term indicator suggests GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The central bank noted that global trade has outperformed previous expectations, and Austrian exports of goods have gained momentum. Additionally, industrial order books and business confidence have improved since the bank’s June forecast.
Enhanced Growth Expectations for 2027
The improved outlook for the latter half of 2026 has led the central bank to elevate its forecast for 2027. The OeNB now projects an economic growth rate of 1.3% in 2027, up from 1.1% in its June forecast. The estimate for 2028 remains steady at 1.2%. Austria experienced a 0.7% growth in 2025 after two years of recession, but the recovery has been subdued due to higher energy costs and challenging international conditions.
The central bank also factored in the economic impact of Austria’s summer drought in its latest analysis, estimating a reduction in growth of about 0.1 percentage point for 2026. OeNB Governor Martin Kocher remarked that industrial orders and sentiment have improved since June despite ongoing difficulties. The bank attributes these developments, along with stronger global trade, to the more optimistic outlook for the second half of 2026 and the increased projection for 2027.
Inflation Projections for 2026 Reduced
The OeNB has also lowered its inflation forecast for Austria. It now anticipates the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from its June estimate of 3.2%. The bank’s projections for inflation in 2027 and 2028 are 2.3% and 2.2%, respectively, with June forecasts at 2.4% for 2027 and 2.1% for 2028. These latest figures suggest a declining inflation trend, influenced by elevated energy prices during 2026.
The September forecast indicates modest growth for Austria in 2026, but a faster expansion is expected in 2027. The projected 0.5% growth for 2026 also aligns with the central bank’s forecast from March. The June update had increased this to 0.6%, but weaker first-half data prompted the recent downward revision. The OeNB’s updated projections for 2026 to 2028 incorporate recent economic data, international conditions, and its latest short-term assessments.