Austria's Economy on Path to Recovery Amidst Challenges

The OECD reports that Austria's economy will recover slowly from a two-year contraction. GDP is expected to grow by 1.1% in 2025 and 1.4% in 2026, while the budget deficit remains above 3%. Inflation is anticipated to fall to the ECB's target, with slight rises in household consumption.

The Organisation for Economic Co-operation and Development (OECD) has projected a gradual recovery for Austria's economy following a two-year contraction. According to their latest Economic Outlook, GDP growth is expected to reach 1.1% in 2025 and 1.4% in 2026.

Despite these positive projections, the OECD report highlights ongoing fiscal challenges, noting that the budget deficit will continue to exceed 3% of GDP. Meanwhile, inflation rates are predicted to decline, aligning with the European Central Bank's 2% target next year.

Household consumption is anticipated to see a slight increase in the medium term, driven by union-led wage negotiations aimed at offsetting inflation's impact on different worker categories. Austria's economy is set to contract by 0.5% this year before embarking on a path to recovery.