The Austrian National Bank (OeNB) revised its forecast for Austria's gross domestic product (GDP) for the year at the end of last week, shifting from an anticipated 0.3% growth to a projected 0.7% contraction.

This downward adjustment reflects ongoing challenges such as an industrial recession and persistently weak consumer spending.

With Austria's GDP already contracting by 0.8% in 2023, the country is now poised to experience its second consecutive year of economic downturn.

In addition to this, the OeNB has also reduced its forecast for GDP growth in 2025, cutting the projection from 1.8% to 1%.

The bank's statement, reported by Xinhua news agency, highlights that the outlook has been further dampened by the sluggish performance of energy-intensive industries and construction sectors, which have been particularly hard hit by weak demand.

Furthermore, the country’s central bank has adjusted its inflation projections, anticipating a decline to 2.9% for this year and a further drop to 2.3% by 2025. 

This decrease from the peak inflation rate of 7.7% observed in 2023 is attributed to falling producer prices and the continuing softness in demand.

In addition, the bank projects that Austria's unemployment rate will rise from 6.4% in 2023 to 7.1% in 2024, with the rate expected to remain above 7% over the following two years. 

This anticipated increase in unemployment is a reflection of the broader economic stagnation and persistent challenges facing the country.