VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank has revised downward its 2026 economic growth forecast following subdued activity during the year’s first half. The bank now anticipates real gross domestic product to increase by 0.5% in 2026, compared to its June forecast of 0.6%. The downgrade of 0.1 percentage points reflects weaker economic performance in the initial six months of 2026, as stated by the bank.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter relative to the previous three months, marking a slowdown after six consecutive quarters of positive growth. Despite this contraction, GDP was still 0.4% higher than the previous year, whereas the first quarter saw an annual expansion of 0.8%. Statistics Austria explained that higher energy prices dampened economic output during the second quarter, adding strain to an economy that had recently exited recession.
Despite the overall forecast reduction for 2026, the OeNB sees more favorable conditions in the second half of the year. Its short-term indicator predicts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank also highlighted that global trade has outperformed earlier expectations, with Austrian exports gaining momentum. Industrial order books and business sentiment have improved since the bank’s June forecast update.
Positive Revision for 2027 Growth Projection
The improved outlook for the latter part of 2026 has led the central bank to raise its forecast for 2027. The OeNB now expects economic expansion of 1.3% next year, up from its previous estimate of 1.1% in June. The forecast for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% growth rate in 2025 following two years of recession, but the recovery remains muted amid elevated energy prices and challenging international conditions.
The central bank’s latest assessment also accounts for the economic impacts of Austria’s summer drought. It estimates that the drought could reduce economic growth by approximately 0.1 percentage points in 2026. OeNB Governor Martin Kocher noted that industrial orders and business sentiment have improved since June despite the tough environment. The bank attributed these developments, along with stronger global trade, to the more optimistic outlook for the second half of 2026 and the increased forecast for 2027.
Inflation Outlook for 2026 Lowered
The OeNB has also decreased its inflation forecast 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 central bank projects inflation rates of 2.3% in 2027 and 2.2% in 2028. These latest projections suggest a declining inflation trend, as rising energy costs impacted prices during 2026. June forecasts had placed inflation at 2.4% for 2027 and 2.1% for 2028.
The September forecast indicates modest growth for Austria in 2026, while pointing to a quicker expansion in 2027. The 0.5% growth projection for 2026 restores the outlook to the level forecasted by the central bank in March. The June update had increased that estimate to 0.6%, but weaker first-half data prompted the recent downward revision. The OeNB’s new projections, spanning 2026 through 2028, incorporate recent economic data, international conditions, and its latest short-term assessment.