High energy prices slow recovery: OECD lowers Austria's GDP forecast

Austria's economic recovery faces headwinds as the Organization for Economic Cooperation and Development (OECD) revises down its growth projections. High energy prices, exacerbated by the conflict in Iran, are the primary concern, leading the OECD to forecast a mere 0.7% Gross Domestic Product (GDP) growth for Austria in 2026, down from an earlier 0.9% estimate. The outlook for 2027 is also tempered, with growth expected at 1.1% instead of 1.2%.

The OECD cautions that these figures are optimistic and could be further dampened by extended disruptions in energy markets. This projected growth lags significantly behind the OECD average of 1.5% for 2026 and 1.7% for 2027. Global economic growth is forecast at 2.8% for 2026 and 3.1% for 2027, with the Middle East conflict posing a severe test to the resilience of the world economy.

Inflation in Austria is expected to average 2.8% this year, moderating to 2.4% in 2027 as commodity price pressures ease. Government measures to cap fuel prices are expected to cushion the overall inflation rate. Despite these efforts, Austria's budget deficit is projected to remain above 4% of GDP through 2027, even with consolidation measures. Lower-than-expected economic performance and a reduction in mineral oil tax in 2026 are anticipated to reduce tax revenues.