IMF Executive Board Concludes 2026 Article IV Consultation with Austria

IMF News, July 20, 2026

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The Executive Board completed the Article IV Consultation for Austria on July 8, 2026, including a discussion of the Financial Sector Assessment Program (FSAP) exercise for Austria.
The authorities have consented to publication of the Staff Report.
A modest economic recovery began in 2025 after a two-year recession, with growth of 1.0 percent in 2025 supported by higher government spending, a recovery in external demand, and a rebound in fixed investment.

Economic growth:
- Growth will remain positive in 2026 but slow to 0.6 percent as higher energy prices weigh on consumption.
- A stronger rebound is expected in 2028–2029 as inflation moderates and household savings rates normalize.
- The economy is projected to slow to potential growth of around 0.8 percent by 2031—below the 1.2 percent average of the past decade—reflecting persistently weak labor productivity growth and a shrinking workforce.
Inflation:
- CPI inflation is projected to rise to 3.2 percent in 2026, about 1.4 percentage points above the prewar forecast due primarily to higher energy prices.
- Headline inflation reached 3.8 percent in May (year-on-year) after pump prices for gasoline jumped roughly 20 percent year-on-year.
- Core inflation reached 3.3 percent in May, suggesting some broadening of price pressures.
- Inflation is expected to gradually fall toward the Euro area average as the energy shock dissipates and the impact of wage restraint takes hold.

Fiscal developments:
- After the deficit reached 4.6 percent of GDP in 2024, triggering the Excessive Deficit Procedure, the authorities announced a substantial multi-year consolidation with a plan to reach a 3 percent of GDP deficit target in 2028.
- Thus far, fiscal adjustment has been somewhat modest, weighed down in part by backward inflation indexation of wages and social benefits.
Executive Board views on fiscal policy:
- Directors welcomed progress on fiscal consolidation and the commitment to a fiscal deficit of 3 percent of GDP by 2028.
- Directors emphasized that additional measures beyond what has been announced may be needed to achieve the target and put debt firmly on a downward path.
- Given Austria’s already high revenue ratio, Directors broadly encouraged greater reliance on durable expenditure reforms, particularly in pensions, healthcare, and subsidies.
- Support in response to higher energy prices should be targeted and temporary.
- Ongoing reforms to fiscal federalism should aim to improve transparency, ensure rules‑based transfers, strengthen accountability, and advance digitalization.

FSAP assessment:
- Short‑term risks to the Austrian financial sector were low prior to the war in the Middle East and remain contained.
- Banks demonstrated resilience under severe adverse stress tests.
- Key risks arise from subdued economic activity, exposure to commercial real estate lending, and potential shocks in the Central Europe and Southeastern Europe region.
Oversight and safety net:
- Financial sector oversight is strong and has been further enhanced in recent years.
- Additional strengthening is needed, particularly in the macroprudential framework and aspects of institutional governance.
- The financial safety net would benefit from stronger coordination during normal times and clearer operational arrangements.
Executive Board recommendations on financial sector:
- Urged continued vigilance on commercial real estate exposures, spillovers from Central, Eastern, and Southeastern Europe, and residential mortgage lending standards.
- Encouraged implementation of key FSAP recommendations to strengthen macroprudential and crisis management frameworks, enhance institutional governance and supervisory resources, and improve financial safety net operational arrangements.

Directors underscored that structural reforms are essential to boost productivity and enhance potential growth.
Recommended priorities:
- Boost labor supply.
- Improve R&D efficiency.
- Reduce restrictive domestic regulations.
- Complete pending energy reforms by accelerating renewable deployment and strengthening energy infrastructure to enhance resilience and competitiveness.
- Measures to deepen European capital markets.

Key downside risks:
- A more severe energy shock.
- Growing external competition in Austria’s key export industries.
Other vulnerabilities noted:
- Demographic headwinds and weak productivity growth weighing on medium‑term growth prospects.

Population (million): 9.2
Per capita GDP: $63,262
Quota (current; millions SDRs/% of total): 3,932 (0.8%)
Literacy 1/: 100%
Poverty rate 2/: 15.9%
Key export markets: Germany, CESEE
Real GDP growth (%):
- 2023: -0.7
- 2024: -0.8
- 2025: 1.0
- 2026 (Proj.): 0.6
Unemployment (Harmonized) (%):
- 2023: 5.1
- 2024: 5.2
- 2025: 5.7
- 2026 (Proj.): 5.6
Inflation (%):
- 2023: 7.7
- 2024: 2.9
- 2025: 3.3
- 2026 (Proj.): 3.2
- 2027 (Proj.): 2.8
Revenue (% of GDP):
- 2023: 49.7
- 2024: 50.6
- 2025: 50.9
- 2026 (Proj.): 51.1
- 2027 (Proj.): 51.3
Expenditure (% of GDP):
- 2023: 52.3
- 2024: 55.3
- 2025: 55.1
- 2026 (Proj.): 55.2
Fiscal balance (% of GDP):
- 2023: -2.6
- 2024: -4.6
- 2025: -4.2
- 2026 (Proj.): -3.8
Public debt (% of GDP):
- 2023: 77.8
- 2024: 80.0
- 2025: 81.4
- 2026 (Proj.): 82.3
- 2027 (Proj.): 82.4
Broad money (% change):
- 2023: -0.1
- 2024: 3.7
- 2025: 4.4
- 2026 (Proj.): 3.6
Credit to the private sector (% change) 3/:
- 2023: 0.2
- 2024: 0.5
- 2025: 2.6
Current account (% of GDP):
- 2023: 1.6
- 2024: 1.5
- 2025: 1.9
- 2026 (Proj.): 0.7
- 2027 (Proj.): 0.9
FDI (% of GDP):
- 2023: 1.8
- 2024: 0.0
Reserves (months of imports):
- 2023: 1.2
- 2024: 2.0
External debt (% of GDP):
- 2023: 151.6
- 2024: 154.5
- 2025: 158.7
- 2026 (Proj.): 160.5
- 2027 (Proj.): 160.7
REER (% change):
- 2023: 0.8

Source: IMF Executive Board Concludes 2026 Article IV Consultation with Austria (Press Release No. 26/252), July 20, 2026.