Low GDP growth in 2025, more momentum in 2026
- Domestic demand and a more stable export economy will give a better boost to the economy in 2026
The stabilization of the Austrian economy continues, but the economy will remain weak at the end of the year. Despite the continued subdued economic development, it now seems quite certain that the Austrian economy will achieve slight economic growth in 2025 after two years of GDP decline. We expect GDP to increase by 0.3 percent. There are no signs of a significant change in the economic situation at the beginning of 2026. In the course of the year, however, the Austrian economy should be able to gain stability and dynamism on the basis of a strengthening of domestic demand. At 1.0 percent, we expect economic growth in 2026 to be noticeably higher than in 2025. - Unemployment rate expected to fall slightly in 2026
Although the seasonally adjusted unemployment rate rose to 7.6 percent in October, this is likely to have reached the peak of the current cycle. We continue to expect the unemployment rate to rise to an average of 7.5 percent in 2025. However, in 2026, even in view of a very limited increase in the labour supply, the unemployment rate should fall to 7.4 percent. - Budget deficit will continue to exceed 4 percent of GDP in 2025
According to calculations by Statistics Austria, the overall budget deficit in 2024 was 4.7 percent of GDP. In order to reduce the budget deficit in 2025, an austerity package of 6.4 billion euros or 1.3 percent of GDP was put together for 2025. However, the scope of this package of measures will only allow for a small reduction in view of the weak economy and the poor guidance from 2024. According to the official budget estimate, we now expect a budget deficit of 4.5 percent of GDP for 2025. - Sharp decline in inflation at the beginning of 2026
At 4.0 percent in October, inflation was now about twice as high as in the previous year for the third month in a row. We expect only a slight decline in inflation by the end of the year. Due to the lower values at the beginning of the year, average inflation is expected to be 3.5 percent in 2025. For 2026, we expect a decline to 2.4 percent, mainly due to the elimination of the effect of the expiry of the electricity price brake from the calculation. - End of the euro area rate cut cycle?
In view of the current economic and inflation data in the euro area, we assume that the ECB will decide against further interest rate hikes by the end of 2026.
As of November 2025.
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.
These publications do not constitute investment advice, investment recommendations, marketing communications, or financial analysis. In particular, they are not an offer or solicitation to buy or sell securities and do not constitute a solicitation to make such an offer. They are intended solely as initial information and are no substitute for advice based on the individual circumstances and knowledge of the investor.
It is an analysis based on publicly available economic data. Despite careful research and the use of reliable sources, no responsibility can be taken for completeness, correctness, timeliness and accuracy.
Any investment in securities involves risks. The value of the investment and the income from it may fluctuate suddenly and substantially and therefore cannot be guaranteed. There is a possibility that the investor will not get back the full amount invested, particularly if the investment is held for only a short time. In some circumstances, a total loss is also possible.
Possible (return) payments from the product may not protect investors against inflation risk. There can be no assurance, therefore, that the purchasing power of the capital invested will not be affected by a general increase in the prices of consumer goods. Figures and information on performance refer to the past and past performance is not a reliable indicator of future results.
Only in the context of an investment advisory service can UniCredit Bank Austria AG take into account the personal circumstances of the customer (investment objectives, experience and knowledge, risk appetite, financial circumstances and financial loss tolerance) and carry out a product-specific suitability test.
We would like to point out that the tax treatment depends on the personal or company circumstances of the investor and that the information on tax advantages is provided on the basis of the current legal situation, which may be subject to future changes and for which no information can be given as to whether they will be continued.
