About Austria Up-to-date
The information provided by Bank Austria in our publication “Austria Up-to-date” includes current economic forecasts and the most recent data for key indicators, in some cases in the form of charts. The key indicators are supplemented by regular comments, and their impact on the forecast is analysed in this report.
Increased energy costs weigh on economic recovery
- Ongoing Iran war weakens the Austrian economy
The moderate recovery of the Austrian economy seems to be continuing in the first months of 2026. However, with the start of the Iran war and the subsequent sharp rise in energy prices, sentiment indicators are pointing noticeably downwards in March. Due to the Iran conflict, we have now withdrawn our growth forecast for the Austrian economy. - Unemployment rate unchanged at 7.5 percent
The slight improvement trend in the labour market stalled at the beginning of the year, but the situation remains stable. The unemployment rate in March was unchanged from the previous months at 7.5 percent, seasonally adjusted. - Budget deficit in 2025 lower than planned
The consolidation efforts in the public budget took effect in the second half of 2025. The general government deficit fell to 21.5 billion euros or 4.2 percent of GDP and thus even remained below the originally planned value of 4.5 percent of GDP. - Iran conflict will cause inflation to rise again
As the preliminary figures for March already indicate, inflation will be significantly higher in the coming months than at the beginning of the year. We have now raised our inflation forecast from 1.9 percent on average in 2026 to 3.0 percent. At 2.6 percent, inflation is also expected to be higher than previously assumed for 2027. - ECB likely to respond with rate hike
Since the Iran war has been going on for some time and the consequences of the blockade of the Strait of Hormuz on inflation are now significant, we assume that the European Central Bank (ECB) will raise key interest rates to stabilize inflation expectations.
As of April 2026.
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