Austria's Economic Outlook: Balancing Challenges and Recovery

Austria's GDP is predicted to contract by 0.1% in 2025, partly due to high energy costs and potential U.S. tariffs. However, stabilization is expected later in the year. The budget deficit is projected to exceed EU limits, with slow recovery forecasted for 2026 and 2027.

The Austrian economy is bracing for a slight contraction of 0.1% in 2025, as newly revised forecasts from the central bank reveal.

Struggling with high energy prices and potential U.S. tariffs, the nation faces significant fiscal challenges. Notably, Austria's budget deficit threatens to exceed EU borrowing limits this year. Despite these hurdles, ONB governor Robert Holzmann suggests that the economy may stabilize by late 2025, with more significant recovery potential hinted for the following years.

Amidst these uncertainties, Austria is striving to secure reliable energy sources after its recent exit from Russian gas supplies. The ONB forecasts inflation at 2.9% by 2025, still above the European Central Bank's target, which highlights continued economic pressures.

(With inputs from agencies.)