VIENNA, AUSTRIA / RankWire.AI / – Austria’s central bank has adjusted its economic growth prediction for 2026 downward following weaker-than-expected activity in the first half of the year. The Oesterreichische Nationalbank now anticipates a real gross domestic product increase of 0.5% in 2026. This is a slight decrease from its June forecast, which projected a growth of 0.6%. The bank explained that the 0.1 percentage point cut reflects a weaker economic performance during the initial six months of 2026 than previously reported.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months. This decline followed six consecutive quarters of positive growth. Despite this dip, GDP was still 0.4% higher than the same period last year, compared with an 0.8% year-on-year increase in the first quarter. Statistics Austria attributed the slowdown during the second quarter to rising energy prices, which dampened economic output and added strain to an economy that had recently emerged from recession.
The OeNB maintains a more optimistic outlook for the second half of 2026 despite the downward revision for the full year. 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 performed better than earlier expectations, and Austrian exports have gained momentum. Additionally, industrial order books and business sentiment have shown improvement since the bank’s June forecast.
Better Growth Forecast for 2027
The improved outlook for the latter part of 2026 has led the central bank to upgrade its forecast for 2027. The OeNB now projects a 1.3% growth rate for next year, up from 1.1% in its June estimate. The projection for 2028 remains unchanged at 1.2%. Austria experienced a 0.7% economic growth in 2025 after two years of recession; however, recovery has remained subdued due to higher energy costs and challenging international circumstances.
The central bank’s latest assessment also factors in the economic impact of Austria’s summer drought. It estimates that the drought will reduce economic growth by roughly 0.1 percentage point in 2026. OeNB Governor Martin Kocher highlighted that industrial orders and sentiment have improved since June despite difficult conditions. The bank stated that these positive developments, together with stronger global trade, have contributed to a more favorable outlook for the second half of 2026 and the increased forecast for 2027.
Inflation Projections Reduced for 2026
The OeNB has also lowered its inflation forecast for Austria. It now expects Harmonised Index of Consumer Prices inflation to average 3.0% in 2026, down from its June estimate of 3.2%. For 2027, the bank projects inflation of 2.3%, and for 2028, 2.2%. In June, projections had indicated 2.4% for 2027 and 2.1% for 2028. The latest figures suggest that inflation is on a decreasing trend following the impact of high energy prices during 2026.
The September forecast indicates modest growth for Austria this year while predicting a quicker expansion in 2027. The 2026 growth forecast of 0.5% aligns with the bank’s projection from March. The June update had increased that estimate to 0.6%, but weaker first-half data prompted the recent downward revision. The OeNB’s new projections span 2026 to 2028 and incorporate recent economic developments, international conditions, and its latest short-term assessment.