VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has adjusted its 2026 economic growth forecast downward after a sluggish first half of the year. The Oesterreichische Nationalbank now predicts a 0.5% increase in gross domestic product this year. This is a decline from its June estimate of 0.6%. The change reflects softer economic activity during the initial six months of 2026. Austria’s economy is still recovering after bouncing back in 2025 following two years of recession.
Official figures show Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This ended a streak of six consecutive quarters of growth. Statistics Austria reported that GDP increased by 0.4% from the same period last year. The first quarter saw an 0.8% annual growth. Rising energy prices contributed to the slowdown in economic activity during the second quarter, adding strain to Austria’s modest recovery.
The central bank anticipates economic momentum to improve in the latter half of 2026. Its latest outlook suggests a quarterly GDP growth of 0.1% in the third quarter. Growth could then rise to 0.3% in the fourth quarter, based on the bank’s baseline scenario. The OeNB cited stronger global trade, improved industrial orders, and more optimistic business sentiment. Austrian exports have also gained momentum compared to earlier in the year.
2027 Economic Growth Forecast Gets Upward Revision
Thanks to the better outlook for the second half, the bank has increased its forecast for 2027. Austria’s economy is now projected to grow by 1.3% in 2027. This is higher than the 1.1% predicted in June. The forecast for 2028 remains unchanged at 1.2%. Austria saw 0.7% growth in 2025, ending two years of decline but maintaining a slow recovery pace.
Weather conditions also influenced the central bank’s recent outlook. The OeNB estimates that Austria’s summer drought will reduce 2026 growth by about 0.1 percentage point. Governor Martin Kocher pointed to improved industrial orders and stronger sentiment since the June forecast. The bank also acknowledged better international trade. These factors contributed to more optimistic projections for the second half of 2026 and the higher forecast for 2027.
Inflation Forecast Is Lowered
Austria’s inflation outlook was also adjusted in the September forecast. The central bank now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026. This is down from the 3.2% estimate in June. The inflation rate is projected at 2.3% in 2027 and 2.2% in 2028. The earlier forecasts stood at 2.4% and 2.1%, respectively. These updated projections reflect the bank’s latest assessment of domestic prices and broader economic conditions.
The September revisions indicate limited growth in Austria for 2026, followed by a stronger recovery next year. The new 0.5% growth forecast aligns with the bank’s projection made in March. It was raised to 0.6% in June before recent weaker data prompted adjustments. The forecast now covers 2026 through 2028, incorporating recent GDP figures, trade developments, inflation trends, and the bank’s updated short-term economic indicators.