VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank has lowered its 2026 economic growth projection following weaker activity in the first half of the year, now anticipating a 0.5% increase in real gross domestic product. This is a downward revision from its June estimate of 0.6%, with the bank attributing the 0.1 percentage point cut to weaker economic performance during the initial six months of 2026.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, breaking a streak of six consecutive quarters of positive growth, yet GDP remained 0.4% higher than a year earlier. In comparison, the first quarter saw annual growth of 0.8%. Statistics Austria noted that rising energy prices hindered economic output during the second quarter, adding pressure to an economy that had recently exited recession.
Despite this full-year downgrade, the OeNB envisions healthier conditions in the latter half of 2026, with its short-term indicator projecting GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank pointed out that global trade has outperformed earlier expectations, and Austrian exports are gaining momentum. Since the June forecast, industrial order books and business confidence have shown improvement.
2027 Growth Outlook Upward Revision
The improved prospects for the second half of 2026 have led the central bank to raise its forecast for 2027, now estimating a 1.3% growth rate compared to its previous 1.1% projection in June. The forecast for 2028 remains unchanged at 1.2%. Austria experienced 0.7% growth in 2025 after two recession years, but the recovery has been modest amid rising energy costs and challenging international conditions.
The OeNB also factored in the economic impact of Austria’s summer drought, estimating it will decrease growth by approximately 0.1 percentage point in 2026. Despite these difficulties, OeNB Governor Martin Kocher noted that industrial orders and sentiment had improved since June. The bank highlighted that these positive developments, combined with stronger global trade, contributed to the more optimistic outlook for the latter half of 2026 and the higher forecast for 2027.
Inflation Rate Forecast Reduced for 2026
The OeNB also lowered its inflation expectations, now predicting Harmonised Index of Consumer Prices inflation will average 3.0% in 2026, down from its June estimate of 3.2%. The central bank’s outlook for 2027 is 2.3%, and for 2028 it remains at 2.2%, compared to previous projections of 2.4% and 2.1%, respectively. These figures suggest inflation is on a downward trend after elevated energy costs influenced prices throughout 2026.
The September forecast indicates that Austria will experience modest growth this year, with a faster expansion expected in 2027. The 2026 growth forecast of 0.5% aligns with the central bank’s projection from March, although the June estimate was slightly higher at 0.6% before weaker first-half data prompted the revision. The latest projections, covering 2026 through 2028, reflect recent economic developments, global conditions, and the bank’s latest short-term outlook.