VIENNA, AUSTRIA / RankWire.AI / – The Oesterreichische Nationalbank (OeNB) has downgraded its 2026 economic growth estimate following weaker activity in the first half of the year. The bank now anticipates a 0.5% increase in real gross domestic product for 2026, down from its June projection of 0.6%. This 0.1 percentage point cut reflects the weaker-than-expected economic performance during the initial six months of the year, the bank explained.
According to Statistics Austria, Austria’s economy shrank by 0.1% in the second quarter compared to the previous three months, breaking a streak of six consecutive quarters of growth. Despite this contraction, GDP was still 0.4% higher than the same period last year, though it grew by only 0.8% in the first quarter. Statistics Austria attributed the slowdown to rising energy prices, which dampened economic output during the second quarter, adding pressure to an economy that had recently recovered from recession.
Despite the downward revision for the full year, the OeNB expects better conditions in the latter half of 2026. Its short-term indicator forecasts GDP growth of 0.1% in the third quarter and 0.3% in the fourth. The bank also noted that global trade has outperformed previous expectations, with Austrian exports gaining momentum. Industrial order books and business confidence have improved since the bank’s June forecast, suggesting a more optimistic outlook for the remainder of the year.
Growth Forecast for 2027 Elevated
The improved prospects for the second half of 2026 have led the OeNB to revise upward its growth outlook for 2027. The central bank now projects a 1.3% expansion next year, compared to its June forecast of 1.1%. However, the estimate for 2028 remains unchanged at 1.2%. After experiencing 0.7% growth in 2025 following two years of recession, Austria’s economic recovery has been somewhat sluggish, hampered by higher energy costs and challenging international conditions.
The OeNB also factored in the economic impact of Austria’s summer drought in its latest assessment. It estimates that the drought will reduce growth by approximately 0.1 percentage points in 2026. OeNB Governor Martin Kocher noted that despite difficult conditions, industrial orders and business sentiment have improved since June. These factors, along with stronger global trade, have contributed to a more positive outlook for the second half of 2026 and the increased forecast for 2027.
Inflation Projection Adjusted Downward for 2026
The OeNB also lowered its inflation outlook for Austria. It now expects the Harmonised Index of Consumer Prices to average 3.0% in 2026, down from the June estimate of 3.2%. For 2027, the bank projects inflation of 2.3%, and for 2028, 2.2%. Previously, in June, the estimates were 2.4% for 2027 and 2.1% for 2028. The revised figures indicate a declining inflation trajectory, influenced by the elevated energy costs during 2026.
The September forecast suggests modest growth for Austria in 2026, with a faster expansion anticipated in 2027. The 0.5% growth projection for 2026 returns to the level forecasted by the central bank in March. The June update increased that estimate to 0.6%, but weaker first-half data prompted this latest downward adjustment. The OeNB’s updated projections for 2026 through 2028 incorporate recent economic data, international conditions, and its latest short-term outlook.
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