VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank has lowered its forecast for Austria’s economic expansion in 2026, citing a weaker start to the year. The bank now predicts a GDP growth rate of 0.5% for 2026, down from its June projection of 0.6%. This adjustment reflects softer economic activity during the initial half of 2026. Austria’s economy is gradually recovering after returning to growth in 2025, following two years of recession.
Data released shows that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This marked the end of six consecutive quarters of growth. Statistics Austria reported a 0.4% increase in GDP from the same period last year. In the first quarter, annual growth had been 0.8%. Elevated energy prices hampered economic activity during the second quarter, adding pressure to Austria’s modest recovery trajectory.
Looking ahead, the central bank anticipates an acceleration in economic momentum during the latter half of 2026. Its most recent short-term outlook indicates a quarterly GDP increase of 0.1% in the third quarter, with potential growth reaching 0.3% in the fourth quarter based on the bank’s baseline scenario. Factors supporting this outlook include stronger global trade, improving industrial orders, and more optimistic business sentiment. Additionally, Austria’s exports of goods have gained traction compared to earlier in the year.
2027 Growth Forecast Elevated
The brighter outlook for the second half of 2026 has prompted the bank to increase its growth estimate for 2027. Austria’s economy is now projected to grow by 1.3% next year, up from the 1.1% forecast issued in June. The forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth rate in 2025, ending two years of contraction, but the overall recovery remains moderate.
Weather conditions have also influenced the central bank’s latest economic analysis. The OeNB estimates that Austria’s summer drought will decrease 2026 growth by approximately 0.1 percentage points. Governor Martin Kocher highlighted improvements in industrial orders and business sentiment since the June forecast. The bank also noted increased support from enhanced international trade. These elements contributed to its more optimistic projections for the second half of 2026 and the upward revision for 2027.
Inflation Projections Adjusted Downward
The September forecast also revises Austria’s inflation outlook. The central bank now anticipates an average Harmonised Index of Consumer Prices inflation of 3.0% for 2026, down from the earlier estimate of 3.2%. For 2027, inflation is expected at 2.3%, and 2.2% in 2028, compared to previous forecasts of 2.4% and 2.1%, respectively. These updated figures reflect the bank’s latest evaluation of domestic price trends and broader economic factors.
Overall, the September revision indicates a scenario of modest growth in 2026, followed by a more robust expansion in 2027. The new 0.5% growth estimate aligns with the projection made by the bank in March, which was raised to 0.6% in June before declining again due to weaker first-half data. The current forecast encompasses 2026 to 2028, factoring in recent GDP data, trade developments, inflation trends, and the bank’s revised short-term economic indicators.