VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank has revised downward its 2026 economic growth projection following weaker activity during the initial half of the year. The bank now anticipates that real gross domestic product will grow by 0.5% in 2026, a slight decrease from its June estimate of 0.6%. The reduction of 0.1 percentage points reflects the weaker economic performance reported during the first 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. This contraction ended a streak of six consecutive quarters of positive growth. Despite this decline, GDP was still 0.4% higher than the same period last year, contrasting with the 0.8% annual growth seen in the first quarter. Statistics Austria attributed the second-quarter slowdown to rising energy prices, which exerted additional pressure on an economy that had recently pulled out of recession.
Despite the downward revision for the full year, the OeNB perceives 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. The bank noted that global trade has outperformed previous expectations, and Austrian exports of goods have gained momentum. Since the June forecast, industrial order books and business sentiment have improved, signaling a more optimistic outlook.
Enhanced Growth Projection for 2027
The improved outlook for the latter part of 2026 has led the central bank to raise its forecast for 2027. The OeNB now predicts a 1.3% expansion in Austria’s economy next year, compared to the earlier estimate of 1.1% from June. The forecast for 2028 remains unchanged at 1.2%. Austria experienced 0.7% economic growth in 2025 after two years of recession, but the recovery has been modest amid higher energy costs and challenging international conditions.
Furthermore, the central bank incorporated the impacts of Austria’s summer drought into its latest analysis. It estimates that the drought will reduce economic growth by roughly 0.1 percentage point in 2026. OeNB Governor Martin Kocher stated that despite the difficult environment, industrial orders and business sentiment have improved since June. The bank highlighted that these developments, together with stronger global trade, contributed to the more positive outlook for the second half of 2026 and the upward revision for 2027.
Inflation Forecast Cut for 2026
The OeNB also lowered its inflation expectations for Austria. It projects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from the June forecast of 3.2%. The bank’s projections for 2027 and 2028 are 2.3% and 2.2%, respectively, compared with previous estimates of 2.4% and 2.1%. This decline in inflation reflects the easing of elevated energy costs that affected prices throughout 2026.
The September forecast presents a modest growth outlook for Austria this year, with a quicker expansion anticipated in 2027. The 0.5% growth projection for 2026 aligns with the bank’s forecast issued in March, which was raised to 0.6% in June before the recent weaker first-half data prompted the latest reduction. Covering 2026 through 2028, the OeNB’s updated projections incorporate recent economic data, international conditions, and its latest short-term assessments.