Austria's economy is waking up: gentle recovery after a long fall!

Austria's economy is waking up: gentle recovery after a long fall!

On October 7, 2025, the Economic Research Institute (Wifo) and the Institute for Advanced Studies (IHS) will present their current economic forecasts for Austria. In recent months, the economic situation in the country has noticeably stabilized, which could end the long recession phase. Loud Leadersnet A moderate economic upswing is predicted.

However, Wifo director Gabriel Felbermayr and IHS director Holger Bonin pointed out the structural challenges that threaten the newfound growth. High inflation and weak export dynamics remain the biggest concerns. Wifo forecasts GDP growth of 0.3% for 2025 and 1.1% for 2026. IHS sees slightly more optimistic growth of 0.4% for 2025 and 0.9% for 2026.

The details of the forecasts

The long recession that affected Austria for around three years is now showing the first signs of recovery. The main driver of this recovery is private consumption, which has already picked up in 2024. Nevertheless, foreign trade in goods remains below expectations, which means that a recovery is not expected until 2026. The Austrian National Bank (OeNB) confirms a GDP growth rate of 0.3% in its forecasts for 2025, which represents a revision of +0.2%.

On the inflation side, a rate of 3.5% is expected for 2025 and 2.4% for 2026. These values ​​reflect great uncertainty, particularly due to US import tariffs and weak international demand. According to the OeNB, the downside risks are greater than the upside risks.

Labor market and investments

Unemployment is expected to rise from 7% last year to 7.4% in 2025, with a slight easing only in 2026. Investments show a mixed picture: While housing investments benefit from falling interest rates, equipment investments continue to pick up only with a delay. However, the labor market remains robust, which is helping consumer sentiment.

In addition, there are calls from the Austrian Chamber of Commerce (WKÖ) for urgent measures to strengthen competitiveness and from the Austrian Federation of Trade Unions (ÖGB) for an active labor market and industrial policy. These developments are particularly important in order to secure the future of the Austrian labor market and give the industry new impetus.

Conclusion: A fragile recovery

In summary, Austria is at a turning point. While the first signs of recovery are emerging, growth remains weak and fragile. There is an urgent need for action to ensure a sustainable recovery. Finance Minister Markus Marterbauer emphasizes the growing importance of consumer demand and increasing employment for budget consolidation. At the same time, however, he warns against excessive expectations of economic development.

The OeNB's forecasts for inflation and GDP growth are published regularly and are crucial for monetary policy in the euro area, as stated OeNB is fixed. With a multitude of challenges ahead of them, it will be crucial how Austrian economic actors react to this situation.