VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has lowered its 2026 economic growth estimate following subdued activity in the first half of the year. The Oesterreichische Nationalbank now anticipates real gross domestic product to grow by 0.5% this year, compared to its June projection of 0.6%. The bank explained that the 0.1 percentage point reduction reflects weaker economic performance during the initial six months of 2026 than previously reported.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline followed six straight quarters of positive economic growth. Despite the contraction, GDP was still 0.4% higher than a year earlier, which is a slowdown from the 0.8% annual growth seen in the first quarter. Statistics Austria noted that rising energy prices put downward pressure on economic output during the second quarter, adding strain to an economy that had recently pulled out of recession.
Despite the full-year downward revision, the OeNB expects more favorable conditions in the second half of 2026. Its short-term indicator suggests GDP growth of 0.1% in the third quarter and 0.3% in the fourth quarter. The central bank highlighted that global trade has performed better than initially expected, and Austrian exports of goods are gaining momentum. Additionally, industrial order books and business sentiment have shown improvement since the bank’s previous forecast in June.
2027 Growth Prospects Brighten
The improved outlook for the latter half of 2026 has led the central bank to raise its forecast for 2027. The OeNB now projects economic growth of 1.3% for next year, up from 1.1% in its June forecast. Its estimate for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth rate in 2025 after two years of recession, but the recovery has been subdued due to higher energy costs and challenging international conditions.
The central bank also factored in the economic impact of Austria’s summer drought in its latest evaluation. It estimates that the drought will reduce economic growth by roughly 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that industrial orders and business sentiment have improved since June despite difficult conditions. The bank noted that these developments, along with stronger global trade, contributed to the more optimistic outlook for the second half of 2026 and the raised forecast for 2027.
Inflation Outlook for 2026 Reduced
The OeNB also lowered its inflation forecast for Austria. It now expects the Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, down from its June estimate of 3.2%. The central bank’s projections for 2027 and 2028 are 2.3% and 2.2%, respectively. The June forecasts had indicated rates of 2.4% for 2027 and 2.1% for 2028. These latest figures suggest inflation is on a downward trajectory after elevated energy costs pushed prices higher during 2026.
The September forecast indicates modest growth in 2026, with a faster expansion expected in 2027. The 0.5% growth projection for 2026 aligns with the central bank’s forecast from March. The June update had increased this estimate to 0.6%, but weaker first-half data prompted the latest downward revision. The OeNB’s current projections for 2026 to 2028 incorporate recent economic developments, international conditions, and its latest short-term assessments.