VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has reduced its 2026 economic growth forecast after a weaker first half of the year. The Oesterreichische Nationalbank now expects gross domestic product to grow by 0.5% this year. Its June forecast had put growth at 0.6%. The revision follows softer economic activity during the first six months of 2026. Austria’s recovery continues after the economy returned to growth in 2025 following two years of recession.
Official data showed that Austria’s economy contracted by 0.1% in the second quarter compared with the previous three months. The result ended six consecutive quarters of quarterly growth. Statistics Austria reported that GDP still rose 0.4% from the same period a year earlier. Annual growth had reached 0.8% in the first quarter. Higher energy prices weighed on economic activity during the second quarter, adding pressure to the country’s modest recovery.
The central bank expects economic momentum to strengthen during the second half of 2026. Its latest short-term assessment points to quarterly GDP growth of 0.1% in the third quarter. Growth could then reach 0.3% in the fourth quarter under the bank’s baseline forecast. The OeNB cited stronger global trade, improving industrial orders and firmer business sentiment. Austrian goods exports have also gained momentum compared with conditions earlier in the year.
Economic growth forecast rises for 2027
The improved second-half outlook has led the bank to raise its projection for next year. Austria’s economy is now forecast to expand by 1.3% in 2027. The previous estimate, published in June, had projected growth of 1.1%. The forecast for 2028 remains unchanged at 1.2%. Austria recorded economic growth of 0.7% in 2025, ending two consecutive years of contraction but leaving the broader recovery at a relatively moderate pace.
Weather conditions also affected the central bank’s latest economic assessment. The OeNB estimates that Austria’s summer drought will reduce 2026 economic growth by about 0.1 percentage point. Governor Martin Kocher pointed to better industrial orders and stronger sentiment since the previous forecast in June. The bank also noted the support from improved international trade. Those factors contributed to its stronger projections for the second half of 2026 and the higher forecast for 2027.
Inflation outlook revised lower
Austria’s inflation outlook also changed in the September forecast. The central bank now expects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026. That compares with a 3.2% estimate in June. Inflation is projected at 2.3% in 2027 and 2.2% in 2028. The previous forecasts stood at 2.4% and 2.1%, respectively. The updated projections reflect the central bank’s latest assessment of domestic prices and broader economic conditions.
The September revision leaves Austria on course for limited growth in 2026, followed by a stronger expansion next year. The new 0.5% forecast also matches the growth rate the central bank projected in March. It had lifted that estimate to 0.6% in June before weaker first-half data prompted the latest adjustment. The current forecast covers 2026 through 2028 and incorporates recent GDP figures, trade developments, inflation trends and the bank’s updated short-term economic indicators.