VIENNA, AUSTRIA / RankWire.AI / – Following a weaker start to the year, Austria’s central banking authority has adjusted its 2026 economic expansion forecast downward. The Oesterreichische Nationalbank now projects a GDP increase of 0.5% for this year, a slight decrease from its June estimate of 0.6%. This revision comes in response to softer economic activity during the first half of 2026. Austria’s recovery persists after the economy returned to growth in 2025 following two years of recession.
Official statistics indicated that Austria’s economy shrank by 0.1% in the second quarter compared with the previous three months, halting six straight quarters of growth. Statistics Austria reported that GDP still increased by 0.4% year-on-year. During the first quarter, annual growth had reached 0.8%. Elevated energy costs negatively impacted economic activity in the second quarter, adding pressure to Austria’s modest recovery trajectory.
The central bank anticipates that economic momentum will pick up in the latter half of 2026. Its latest short-term outlook suggests a quarterly GDP growth of 0.1% in the third quarter, with potential growth of 0.3% in the fourth quarter under the baseline forecast. The OeNB highlighted factors such as increased global trade, rising industrial orders, and more optimistic business sentiment as contributing to the improved outlook. Additionally, Austrian exports of goods have gained traction compared to earlier in the year.
Forecast for economic growth in 2027 is upgraded
The brighter second-half outlook has prompted the bank to raise its estimate for the upcoming year. Austria’s economy is now expected to grow by 1.3% in 2027, up from the previous projection of 1.1% published in June. The forecast for 2028 remains at 1.2%. Austria’s economy expanded by 0.7% in 2025, ending two years of contraction but still progressing at a relatively moderate pace.
Weather conditions also influenced the latest economic outlook from the central bank. The OeNB estimates that the summer drought will reduce Austria’s 2026 growth by approximately 0.1 percentage points. Governor Martin Kocher highlighted that stronger industrial orders and improved sentiment since the June forecast, alongside better international trade conditions, supported the revised projections. These factors contributed to the more optimistic forecast for the latter half of 2026 and the upward revision for 2027.
Inflation forecast lowered in September
In its September forecast, Austria’s inflation outlook was also revised downward. The central bank now expects the Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, compared to a 3.2% estimate in June. For 2027, inflation is projected at 2.3%, and 2.2% in 2028, both slightly lower than previous estimates of 2.4% and 2.1%. These updated projections reflect the central bank’s latest assessment of domestic price developments and broader economic conditions.
The September revision indicates a limited growth trajectory for Austria in 2026, followed by a more robust expansion in the subsequent year. The new forecast of 0.5% aligns with the central bank’s March estimate, which was later increased to 0.6% in June before the weaker first-half data prompted this latest adjustment. Covering 2026 through 2028, the forecast incorporates recent GDP figures, trade patterns, inflation trends, and the bank’s updated short-term economic indicators.