The ongoing energy crisis is forecast to impact Austria's economy in the medium term, leading the country's GDP to increase by an average annual 1% from 2023 to 2027.

This is according to a report published by the Austrian Institute of Economic Research (WIFO) on Wednesday.

The WIFO findings show high energy prices will result in stagflation in the country next year, with a forecast GDP growth of 0.2% and a rate of inflation of 6.5%.

"High energy prices reduce production opportunities and competitiveness, in particular for globally active energy-intensive companies," the Austrian Institute stated.

These latest findings indicate energy prices in Austria are predicted to decline from 2024, but not to the low prices registered in 2020 and 2021.

The report states that as energy prices fall from 2024, inflation will again slow down – predicted to be 2.4% in 2027 – yet remain above the European Central Bank's target of 2%. 

Last month, Statistics Austria said that skyrocketing energy prices had continued to increase the inflation rate in the country, which hit 10.5% in September, representing a seven-decade high.

The Austrian Institute of Economic Research's report went on to add: "Despite extensive fiscal policy measures to cushion the impact of inflation, the budget deficit ratio will likely stabilise at around 1.3% of nominal GDP in the medium term. Government debt is expected to increase by €34.5 billion in the period 2023-2027. The debt ratio falls from 77.1% (2022) to just under 68% (2027) due to the strong expansion of nominal GDP."