VIENNA, AUSTRIA / RankWire.AI / – Following a weaker performance in the first half of the year, Austria’s central bank has adjusted downward its 2026 economic growth outlook. The Oesterreichische Nationalbank now predicts that gross domestic product will increase by 0.5% this year, a slight decrease from its June projection of 0.6%. This adjustment comes amid softer economic activity during the first half of 2026. Austria’s economy continues to recover after returning to growth in 2025 following two years of recession.
Official figures indicate that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, ending a streak of six straight quarters of growth. Statistics Austria reported that GDP still increased by 0.4% year-over-year. The first quarter had seen an 0.8% annual growth. Rising energy costs negatively impacted economic activity during the second quarter, adding pressure to the country’s modest recovery.
The central bank forecasts an improvement in economic momentum during the latter half of 2026. Its latest short-term outlook suggests a quarterly GDP increase of 0.1% in the third quarter. Under the bank’s baseline scenario, growth could then reach 0.3% in the final quarter. The OeNB attributes this optimistic outlook to stronger global trade, improved industrial orders, and more positive business sentiment. Additionally, Austria’s exports of goods have gained traction compared to earlier conditions this year.
Forecasts for 2027 reflect upward revisions in growth
The brighter outlook for the second half of 2026 has prompted the bank to raise its growth forecast for the following year. Austria’s economy is now expected to expand by 1.3% in 2027, up from the previous estimate of 1.1% published in June. The forecast for 2028 remains unchanged at 1.2%. Austria experienced economic growth of 0.7% in 2025, ending two consecutive years of contraction, but the overall pace of recovery remains moderate.
Weather conditions have also influenced the central bank’s latest economic assessment. The OeNB estimates that Austria’s summer drought will reduce 2026 growth by approximately 0.1 percentage points. Governor Martin Kocher highlighted improvements in industrial orders and business sentiment since the June forecast. The bank also acknowledged the positive impact of enhanced international trade. These factors contributed to more optimistic projections for the second half of 2026 and the upward revision for 2027.
Inflation projections lowered in the September forecast
Austria’s inflation outlook was also updated in the September forecast. The central bank now anticipates that the Harmonised Index of Consumer Prices will average 3.0% in 2026, down from 3.2% estimated in June. For 2027, inflation is expected to reach 2.3%, and for 2028, 2.2%. The previous estimates stood at 2.4% and 2.1%, respectively. These updated figures reflect the bank’s latest evaluation of domestic price trends and broader economic conditions.
The September revision indicates a scenario of modest growth in 2026, followed by a more solid expansion in 2027. The new growth forecast of 0.5% aligns with the estimate the central bank made in March. After raising that to 0.6% in June, weaker first-half data prompted the latest downward adjustment. The forecast for 2026 through 2028 incorporates recent GDP figures, trade developments, inflation trends, and the bank’s revised short-term economic indicators.