Tuesday, 15 September 2026
Austria’s economy delivered a mixed performance during the first half of 2026, with stronger exports and pockets of industrial resilience offset by weak domestic activity, renewed inflationary pressure and continued difficulties in construction. The year began with modest economic expansion, but momentum faded during the spring. Real GDP increased by 0.1% in the first quarter compared with the previous three months before declining by 0.1% in the second quarter. Compared with a year earlier, economic output was 0.8% higher in Q1 and 0.4% higher in Q2.
The figures indicate that Austria has moved beyond the prolonged period of economic contraction experienced in previous years, although the subsequent recovery remains weak. The small decline during the second quarter was also below earlier expectations, reinforcing concerns that domestic demand has not yet become strong enough to generate sustained expansion. Construction remained among the weaker parts of the economy during the period. Industrial activity proved comparatively more resilient, while corporate spending on machinery and equipment provided some support to investment.
Households faced another challenge as inflation accelerated during the spring. Annual consumer-price growth stood at 2.0% in January and 2.2% in February before increasing to 3.2% in March. Inflation subsequently reached 3.4% in April and 3.7% in May before easing to 3.2% in June. Energy costs contributed significantly to the renewed increase in prices, creating a more difficult environment for household purchasing power just as stronger consumer expenditure had been expected to contribute to Austria’s recovery.
Retail activity reflected this uneven environment. Inflation-adjusted turnover weakened during April and May before recovering in June. Real retail turnover, including filling stations, increased by 2.3% year-on-year in June, while nominal turnover rose by 4.5%.
Austria’s labour market remained relatively stable in headline terms, but changes beneath the overall employment figure suggest companies continued to operate cautiously. Around 4.50 million people were employed during the second quarter, little changed from the corresponding period of 2025. The balance between full-time and part-time work shifted noticeably, with part-time employment increasing by approximately 57,200 people year-on-year while full-time employment declined by around 57,400. The share of employees working part-time consequently reached 32.1%.
Unemployment also moved moderately higher. Approximately 272,100 people were unemployed during the second quarter, an increase of 11,100 compared with a year earlier. The internationally comparable unemployment rate increased from 5.5% in Q2 2025 to 5.7% in Q2 2026.
Foreign trade was one of the more positive elements of the first-half economy. Austria exported goods worth approximately €100.1 billion between January and June, representing growth of 5.4% compared with H1 2025. Imports increased by 5.9% to approximately €103.8 billion. As imports grew slightly faster than exports, Austria recorded a merchandise trade deficit of approximately €3.7 billion during the six-month period, compared with around €3.1 billion a year earlier.
European markets provided much of the improvement in Austrian exports. Shipments to EU countries increased by 6.6% to approximately €68.6 billion. Germany remained Austria’s most important trading partner, with exports to the country increasing by 5.9%. Exports to Italy grew by 10.0%, while shipments to the United Kingdom increased by 15.1%. Conditions were less favourable in several major markets outside Europe. Austrian exports to the United States declined by 4.0%, while exports to China fell by 6.7%. At the same time, imports from China increased by 22.0%.
Public finances represent another constraint on the pace of recovery. Government debt stood at approximately €431.4 billion at the end of the first quarter, equivalent to 83.5% of GDP. This represented an increase of approximately €13.3 billion from the end of 2025. Austria therefore faces the difficult combination of rebuilding economic growth while reducing pressure on its public finances. Higher expenditure requirements across areas including healthcare, long-term care, defence and debt servicing are limiting the government’s financial flexibility.
The outlook for the remainder of the year remains cautious. The Austrian National Bank reduced its 2026 GDP growth forecast to 0.5% in September, compared with the 0.6% expected in its June forecast. The revision followed weaker economic activity during the first six months of the year. A more visible recovery is expected in 2027, when the central bank forecasts economic growth of approximately 1.3%. Inflation is expected to average around 3.0% during 2026 before slowing to approximately 2.3% next year.
Austria consequently entered the second half of 2026 with its economic recovery still fragile. Export growth and parts of the industrial economy are providing support, but these improvements have yet to translate into stronger domestic consumption, employment growth or a broad acceleration in investment.
For the property industry, the economic environment points towards continued caution rather than rapid expansion. Limited GDP growth may restrain companies’ willingness to increase their occupational footprint, while continued weakness in construction could gradually reduce the delivery of new modern space in selected markets. The second half of the year will therefore provide an important test of whether Austria’s improving export performance can spread into the wider economy. A sustained recovery will depend increasingly on businesses investing, households spending and employment strengthening rather than simply on the country avoiding another prolonged period of contraction.
Source: CIJ.World Research & Analysis Team
