VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has adjusted its 2026 economic growth forecast to 0.5%, citing weaker activity during the first half of the year. The Oesterreichische Nationalbank had previously projected a 0.6% growth in June. The bank explained that the 0.1 percentage point reduction reflects a weaker economic performance than initially reported during the initial six months of 2026.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline interrupted six consecutive quarters of positive growth. Nonetheless, GDP was still 0.4% higher than a year earlier, contrasting with an 0.8% growth rate in the first quarter. Statistics Austria noted that increased energy prices dampened economic output during the second quarter, adding pressure to an economy that had recently exited recession.
Despite the downward revision for the entire year, the OeNB anticipates more favorable conditions in the latter half of 2026. Its short-term indicator suggests GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank also highlighted that global trade has outperformed previous expectations, and Austrian exports of goods have gained momentum. Industrial order books and business sentiment have improved since the bank’s June forecast.
2027 Growth Outlook Elevated
The improved outlook for the second half of 2026 has led the central bank to elevate its forecast for 2027. The OeNB now predicts economic growth of 1.3% next year, up from its June estimate of 1.1%. Its projection for 2028 remains unchanged at 1.2%. After experiencing 0.7% growth in 2025 following two recessionary years, Austria’s recovery has remained modest amid rising energy costs and challenging global conditions.
The central bank also factored in the economic impact of Austria’s summer drought into its recent assessment, estimating a reduction of about 0.1 percentage point in growth for 2026. OeNB Governor Martin Kocher stated that industrial orders and business sentiment had improved since June despite difficult circumstances. The bank indicated that these developments, combined with stronger global trade, contributed to the better outlook for the second half of 2026 and the increased forecast for 2027.
Inflation Forecast for 2026 Reduced
The OeNB also lowered its inflation expectations for Austria. It now projects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from its June estimate of 3.2%. The bank’s forecasts for 2027 and 2028 are 2.3% and 2.2%, respectively. The previous projections from June were 2.4% for 2027 and 2.1% for 2028. These latest figures suggest a declining inflation trend following elevated energy prices that influenced prices during 2026.
The September forecast indicates modest growth for Austria in 2026, with a quicker expansion anticipated in 2027. The 2026 growth estimate of 0.5% aligns with the central bank’s projection from March. The June update had increased that forecast to 0.6%, but weaker first-half data prompted the recent downward adjustment. The OeNB’s updated projections span 2026 through 2028 and incorporate recent economic data, international conditions, and its latest short-term evaluation.