VIENNA, March 27 (Xinhua) -- Austria is set to experience its third consecutive year of recession in 2025, with economic recovery anticipated in 2026, according to forecasts released on Thursday.

The Austrian Institute of Economic Research (WIFO) predicts a 0.3 percent decline in the country's gross domestic product (GDP) in 2025, followed by a 1.2 percent increase in 2026. WIFO attributes the downturn to the ongoing decline in industrial production across the euro area and the impact of impending U.S. tariff hikes on EU exports.

The Institute for Advanced Studies (IHS) forecasted a 0.2 percent GDP contraction in 2025 and a 1.1 percent growth in 2026. According to IHS, budget consolidation efforts by Austria's new federal government could reduce growth by 0.3 percentage points in 2025.

Despite the challenges, a cautious rise in private consumption, lower interest rates compared to the previous year, and an economic rebound in the euro area are expected to support Austria's return to modest growth in the second half of 2025, according to IHS. Enditem

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