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.
Moderate recovery after economic dib due to Iran war?
- Revival expected in the second half of the year
Due to the energy price shock and supply chain problems during the Iran war, the Austrian economy suffered an economic dip from spring onwards. Regardless of the recent escalation, a gradual easing of the geopolitical crisis can be expected in the coming months. We continue to expect economic growth of 0.8 percent in 2026 and a slight improvement to 1.2 percent in 2027. - Unemployment rate rose to 7.6 percent in June
Due to the unfavourable influence of the consequences of the Iran war on the economy, there has not been the originally expected easing of the labour market in the course of the year so far, but on the contrary even a slight increase in the unemployment rate.
After the unemployment rate rose to 7.5 percent on average in 2026, we expect the unemployment rate to fall to at least 7.4 percent in 2027. - Double budget for 2027/28 adopted
On 10 July, parliament adopted the budget plan for 2027 and 2028. By 2028, the deficit is to be reduced to 3 percent of GDP. There is no room for manoeuvre in the event of a weaker economy, which is why we have raised our forecast for the budget deficit in 2027 to 3.8 percent, after a deficit of 4 percent in 2026. - Easing of commodity prices dampens inflationary pressures
After an average of 3.0 percent in the first half of the year, inflation is likely to increase in the second half of the year. Despite the recent geopolitical escalation, however, the upward pressure on oil prices remains comparatively moderate. Inflationary pressures are therefore likely to be lower than originally expected. Against this backdrop, we have lowered our inflation forecast for 2026 from 3.4 percent to 3.2 percent. For 2027, we now expect an inflation rate of 2.5 percent instead of the previous 2.6 percent. - Key interest rates raised by 25 basis points in June
After the ECB's expected interest rate hike of 25 basis points in June, we believe that the ECB will wait to take further steps for the time being. We expect the ECB to raise the key interest rate by 25 basis points in September.
As of July 2026.
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