VIENNA, AUSTRIA / RankWire.AI / – Austria’s economy is expected to grow more slowly in 2026, with the central bank adjusting its projections downward amid a weaker performance in the first half of the year. The Oesterreichische Nationalbank now predicts a gross domestic product increase of 0.5% for 2026, a slight decrease from its June forecast of 0.6%. This revision reflects softer economic activity during the initial six months of the year. Austria’s economic recovery persists after returning to growth in 2025 following two years of recession.
Official statistics revealed that Austria’s GDP shrank by 0.1% in the second quarter compared to the previous three months, ending a streak of six consecutive quarters of expansion. Statistics Austria reported a 0.4% increase in GDP when compared to the same period last year. The first quarter’s growth was recorded at 0.8%. Rising energy costs negatively impacted economic activity during the second quarter, adding pressure to Austria’s modest recovery.
Looking ahead, the central bank anticipates a pickup in economic momentum during the latter half of 2026. Its latest short-term outlook indicates a quarterly GDP increase of 0.1% in the third quarter, with growth possibly reaching 0.3% in the final quarter, based on the bank’s baseline forecast. The OeNB pointed to stronger global trade, improved industrial orders, and more optimistic business sentiment as factors supporting this outlook. Austrian exports have also gained momentum compared to earlier in the year.
Forecast for 2027 Shows Growth Increase
The brighter outlook for the second half of 2026 has led the bank to revise upward its growth projection for 2027. Austria’s economy is now expected to expand by 1.3% next year, compared to the previous estimate of 1.1% released in June. The forecast for 2028 remains steady at 1.2%. Austria’s economy grew by 0.7% in 2025, ending two years of decline but maintaining a moderate recovery pace overall.
Weather conditions have also played a role in the central bank’s recent economic outlook. The OeNB estimates that Austria’s summer drought will decrease 2026 economic growth by roughly 0.1 percentage point. Governor Martin Kocher highlighted improved industrial orders and stronger sentiment since the June forecast, alongside better international trade conditions. These factors contributed to the bank’s more optimistic projections for the second half of 2026 and the upgraded forecast for 2027.
Inflation Expectations Lowered in September
The inflation outlook was also revised downward in the September forecast. The central bank now expects the Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, down from 3.2% in June. The projections for 2027 and 2028 are 2.3% and 2.2%, respectively, slightly lower than previous estimates of 2.4% and 2.1%. These updated figures reflect the bank’s latest evaluation of domestic price trends and broader economic conditions.
The September revisions indicate a scenario of limited growth in 2026, followed by a more robust expansion in the subsequent year. The new 0.5% growth estimate aligns with the forecast made by the central bank in March, which was raised to 0.6% in June before recent weaker data prompted the latest adjustment. The forecast now covers 2026 through 2028, incorporating recent GDP results, trade developments, inflation trends, and the bank’s revised short-term economic indicators.