VIENNA, AUSTRIA / RankWire.AI / – Following a weaker first half of the year, Austria’s Oesterreichische Nationalbank has downgraded its 2026 economic expansion forecast. The bank now anticipates a 0.5% increase in gross domestic product for this year, down from its June projection of 0.6%. This revision reflects softer economic activity during the initial six months of 2026. Austria’s recovery persists after bouncing back to growth in 2025 following two years of recession.
Official figures reveal that Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, marking the end of six consecutive quarters of growth. Statistics Austria reported that GDP still increased by 0.4% compared to the same period last year. In the first quarter, annual growth had reached 0.8%. Rising energy costs exerted downward pressure on economic activity during the second quarter, adding to the challenges faced by the country’s modest recovery.
The central bank projects that economic momentum will strengthen in the latter half of 2026. Its latest short-term outlook indicates a quarterly GDP increase of 0.1% in the third quarter, with potential growth reaching 0.3% in the fourth quarter according to the bank’s baseline scenario. The Oesterreichische Nationalbank attributes this optimistic view to stronger global trade, improved industrial orders, and more confident business sentiment. Austrian exports of goods have also picked up compared to earlier in the year.
2027 Economic Growth Forecast Is Raised
The improved outlook for the second half of 2026 has prompted the bank to upgrade its growth projection for the following year. Austria’s economy is now expected to grow by 1.3% in 2027, up from the 1.1% forecast published in June. The forecast for 2028 remains unchanged at 1.2%. Austria achieved a 0.7% growth rate in 2025, marking the end of two years of contraction, but the overall pace of recovery remains moderate.
Weather conditions also influenced the central bank’s recent economic assessment. The OeNB estimates that Austria’s summer drought will decrease 2026 economic growth by roughly 0.1 percentage points. Governor Martin Kocher highlighted stronger industrial orders and improved sentiment since the June forecast. The bank also noted that international trade had supported the outlook. These factors contributed to the more optimistic projections for the second half of 2026 and the increased forecast for 2027.
Inflation Forecast Lowered in September
Austria’s inflation outlook was also revised in the September forecast. The Oesterreichische Nationalbank now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, compared to the 3.2% estimate in June. The inflation forecast for 2027 is set at 2.3%, and 2.2% for 2028, with previous estimates at 2.4% and 2.1%, respectively. These updated projections reflect the bank’s latest evaluation of domestic price trends and overall economic conditions.
The September adjustments suggest a limited growth trajectory for Austria in 2026, followed by a more robust expansion in the subsequent year. The new 0.5% growth forecast aligns with the bank’s projection made in March, which was raised to 0.6% in June before the recent weaker data prompted this latest revision. The forecast now spans 2026 through 2028, incorporating recent GDP figures, trade developments, inflation trends, and the bank’s revised short-term economic indicators.