VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has adjusted its 2026 economic growth projection downward following weaker activity in the first half of this year. The Oesterreichische Nationalbank now anticipates real gross domestic product to grow by 0.5% in 2026. This marks a slight decrease from the June forecast, which predicted 0.6%. The bank explained that the 0.1 percentage point cut reflects the weaker-than-expected economic performance during the initial six months of 2026.
According to Statistics Austria, Austria’s GDP shrank by 0.1% in the second quarter compared to the previous quarter, breaking a streak of six consecutive quarters of positive growth. Despite the decline, GDP was still 0.4% higher than in the same period last year, compared to 0.8% annual growth in the first quarter. Statistics Austria highlighted that rising energy prices impacted economic output during the second quarter, adding pressure to an economy that recently exited recession.
The OeNB remains optimistic about the latter half of 2026, despite the full-year downward revision. Its short-term indicator suggests GDP could increase by 0.1% in the third quarter and 0.3% in the fourth. The bank noted that global trade performance has exceeded previous expectations, and Austrian exports have gained momentum. Since June, industrial order books and business sentiment indicators have improved, bolstering the outlook.
2027 Growth Prospects Improve
The more favorable outlook for the second half of 2026 has led the central bank to raise its forecast for 2027. The OeNB now projects a 1.3% growth rate for 2027, up from 1.1% predicted in June. Its estimate for 2028 remains unchanged at 1.2%. Austria experienced 0.7% economic growth in 2025 following two years of recession, but recovery has remained muted amid higher energy prices and challenging international conditions.
Additionally, the central bank has factored in the economic impact of Austria’s summer drought into its recent assessment. It estimates that the drought will reduce growth by approximately 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that industrial orders and business sentiment have improved since June despite the tough conditions. The bank explained that these developments, along with stronger global trade, have contributed to the improved outlook for the second half of 2026 and the elevated forecast for 2027.
Inflation Forecast for 2026 Reduced
The OeNB also lowered its inflation projection for Austria. It now expects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, down from its June estimate of 3.2%. The bank’s forecasts for 2027 and 2028 stand at 2.3% and 2.2%, respectively, with the June projections indicating 2.4% for 2027 and 2.1% for 2028. Recent figures suggest inflation will follow a downward trend after elevated energy costs impacted prices during 2026.
The September forecast indicates modest growth for Austria this year but predicts a quicker expansion in 2027. The 2026 growth estimate of 0.5% aligns with the forecast made by the central bank in March. Although the June update increased this to 0.6%, weaker data from the first half of 2026 prompted the latest downward revision. The OeNB’s updated projections now span from 2026 to 2028, reflecting recent economic data, international conditions, and its latest short-term assessments.