VIENNA, AUSTRIA / RankWire.AI / – Following a softer performance in the first half of 2026, Austria’s central banking authority has revised downward its growth forecast for the year. The Oesterreichische Nationalbank now anticipates the country’s gross domestic product (GDP) will increase by 0.5% this year, a slight decrease from its June prediction of 0.6%. This adjustment comes in the wake of subdued economic activity observed during the initial six months of 2026, as Austria’s economic recovery persists after bouncing back in 2025 following two years of recession.
Official figures revealed a 0.1% contraction in Austria’s economy during the second quarter when compared to the previous quarter, marking the end of six straight quarters of growth. Nonetheless, Statistics Austria indicated that the GDP still increased by 0.4% year-over-year, with annual growth reaching 0.8% in the first quarter. The second quarter’s modest growth was hindered by rising energy prices, which exerted additional pressure on the ongoing, albeit slow, economic recovery.
Looking ahead, the central bank expects the economic momentum to pick up during the latter half of 2026, with its recent short-term outlook suggesting quarterly GDP growth of 0.1% in the third quarter, potentially rising to 0.3% in the final quarter of the year in line with the bank’s baseline scenario. Factors contributing to this optimism include stronger global trade flows, improved industrial orders, and a more confident business sentiment, alongside Austrian exports gaining pace compared to earlier in the year.
Forecast for Economic Growth in 2027 Is Upgraded
The more favorable outlook for the second half of 2026 has prompted the bank to revise its growth projections for the upcoming year, now estimating Austria’s economy will expand by 1.3% in 2027, an increase from the 1.1% forecast issued in June. Meanwhile, the forecast for 2028 remains steady at 1.2%. Austria’s economy grew by 0.7% in 2025, ending two consecutive years of contraction and signaling a moderate pace of recovery overall.
Weather conditions have also played a role in the central bank’s recent economic evaluation, with the OeNB estimating that the summer drought will reduce 2026 growth by roughly 0.1 percentage point. Governor Martin Kocher highlighted improvements in industrial orders and business sentiment since the June forecast, along with the support from increased international trade. These elements have contributed to the bank’s upgraded projections for the latter half of 2026 and the more optimistic growth outlook for 2027.
Inflation Projections Are Lowered in September
The outlook for inflation in Austria was also adjusted downward in the September forecast, with the central bank now predicting that the Harmonised Index of Consumer Prices (HICP) will average 3.0% in 2026, compared to the 3.2% estimated in June. Projections for 2027 and 2028 are 2.3% and 2.2%, respectively, aligning with the previous forecasts of 2.4% and 2.1%. These revised estimates reflect the bank’s latest assessment of domestic price movements and the overall economic landscape.
This September revision indicates a scenario of limited growth in 2026, followed by a more robust expansion in the subsequent year. The new 0.5% growth forecast matches the projection made by the central bank in March, after being raised to 0.6% in June before recent weaker first-half data prompted the latest revision. The forecast, spanning 2026 through 2028, incorporates recent GDP figures, trade developments, inflation trends, and the bank’s updated short-term economic indicators.