Higher inflation caused by the Iran conflict will slightly slow the recovery of the Austrian economy
“Business confidence among companies in Austria deteriorated slightly in February. The UniCredit Bank Austria Business Indicator fell marginally to minus 0.5 points. Despite the decline, the indicator – apart from the previous month – stood at its highest level since the summer of 2022”, says UniCredit Bank Austria Chief Economist Stefan Bruckbauer.
- The UniCredit Bank Austria Business Indicator had already deteriorated slightly to minus 0.5 points in the run-up to the Iran conflict
- Sentiment deteriorated across all economic sectors, particularly in the construction industry, though consumer pessimism eased
- The Iran conflict will only slightly slow the tentative recovery of the domestic economy: we are lowering our GDP forecast by 0.1 percentage points to 0.9 per cent for 2026 and 1.4 per cent for 2027
- Geopolitical uncertainties will dampen the willingness to invest, and higher inflation will have a negative impact on consumer spending
- The labor market remains stable: the unemployment rate is expected to fall slightly to 7.3 per cent in 2026 and 7.2 per cent in 2027
- We expect military operations against Iran to be of a manageable duration of a few weeks, followed by a gradual easing of disruptions to energy supplies
- The rise in energy prices will nevertheless reverse the decline in inflation in Austria: we are raising our inflation forecast for 2026 from 1.9 per cent to 2.5 per cent
- In 2027, inflation could reach 2.2 per cent, 0.2 percentage points higher than previously assumed
- ECB in a wait-and-see mode: no key interest rate hike expected for the time being
UniCredit Bank Austria Business Indicator (PDF)
UniCredit Bank Austria Business Indicator – Computation method (PDF)
as of March, 2026
About UniCredit Bank Austria Business Indicator
The UniCredit Bank Austria Business Indicator provides an overview of the current economic situation in Austria.
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