Austria's economy: Finally an easy upswing after years of crisis!

Austria's economy: Finally an easy upswing after years of crisis!

Austria's economy shows the first signs of stabilization in the first quarter of 2025 after seven quarters have passed with negative growth. The gross domestic product (GDP) recorded a minimal increase of 0.1 % compared to the fourth quarter of 2024, but remains below the result of the first quarter 2024. This is how vienna.at .

A review of the development of the different sectors shows that public administration, education and healthcare were increasing by 0.7 %. At the same time, however, there were declines in important areas such as trading (−0.4 %), the gastronomy and accommodation (−2.6 %) and traffic (−1.7 %). This is a clear indication of the challenges with which the domestic economy is confronted.

economic framework conditions

The Austria National Bank (OENB) expects GDP growth of only 0.2 %for the entire year 2025. According to forecasts, growth will increase moderately in the following years, with 0.9 % in 2026 and 1.1 % in 2027. Positive factors for this are improved industrial production and indices. Nevertheless, a loss of price competitiveness and weak private consumption represent significant challenges, such as orf.at reported.

In particular, the introduction of new tariffs by US President Donald Trump is considered a powerful negative factor. These tariffs could reduce economic growth in Austria by around 0.2 to 0.35 percentage points and thus have profound effects on the export industry. Experts from the Vienna Institute for International Economic Comparative (WIIW) estimate that an increase in customs for 20 percent could significantly reduce EU exports to the United States.

inflation and budget forecasts

The inflation estimate for Austria is 3.0 %in 2025, and there is a decisive factor for this is increasing service inflation and energy prices. This inflation is expected to go back to 1.8 % in 2026 and in 2027 to 2.1 %. The budget deficit is estimated in 2025 to minus 4.2 % of GDP, with a slight improvement to minus 3.8 % in 2026. For 2027, however, the deficit is predicted again, provided that no further consolidation measures are taken.

While the cost pressure seems to lose weight on companies and households, the new federal government is considering a consolidation volume of around 4 billion euros in order to stabilize the financial situation. The effects of state support measures that expire on the market also increase prices for budgetary energy, which could continue to drive inflation. However, the OENB economic indicator shows the first signs of a trend reversal in industrial production, which arouses hope for gradual recovery. This is also reported by the OENB on its platforms here .