Austria’s central bank has lowered its 2026 economic growth forecast to 0.5% from 0.6% after weaker than expected activity in the first half of the year. However, the bank raised its 2027 forecast to 1.3% from 1.1%, citing stronger global trade and improving conditions in Austria’s manufacturing sector.
Austria’s economy is expected to grow more slowly than previously forecast this year, but the outlook for 2027 has improved as global trade and domestic manufacturing conditions show signs of recovery.
The Oesterreichische Nationalbank (OeNB) cut its forecast for Austrian gross domestic product growth in 2026 to 0.5% from 0.6%, citing weaker-than-expected economic performance during the first half of the year.
At the same time, the central bank raised its 2027 growth forecast to 1.3% from 1.1%, saying improvements in global trade and domestic business conditions should provide greater support to the economy next year.
The OeNB said global trade has performed better than expected, which should benefit Austria’s export-oriented economy. It also pointed to improving order books and business sentiment in the domestic manufacturing sector.
However, the central bank expects much of the benefit from those improvements to become more visible in 2027, rather than immediately lifting growth this year. The outlook also remains subject to geopolitical risks, including the conflict in the Middle East, as well as the effects of a summer drought.
The revised forecast comes as the wider European economy faces renewed pressure from higher energy prices. Oil and gas prices have risen sharply amid disruptions linked to the conflict in the Middle East, creating fresh concerns about inflation across the region.
Despite those risks, the OeNB also became slightly more optimistic about Austria’s inflation outlook. It now expects inflation, measured by the Harmonised Index of Consumer Prices, to average 3.0% in 2026, down from its previous forecast of 3.2%. The 2027 forecast was reduced to 2.3% from 2.4%.
The more positive 2027 growth projection comes against a broader backdrop of improving expectations for the euro zone economy. The European Central Bank raised its 2026 euro zone growth forecast to 0.9% from 0.8% and its 2027 projection to 1.4% from 1.2%, although it also warned that inflationary pressures from energy costs remain significant.
For Austria, the combination of stronger external demand and improving manufacturing sentiment provides a potential path toward faster growth next year. However, the economy remains exposed to energy prices, geopolitical developments and the strength of European and global trade.
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