Iran War Dampens Sentiment in Retail Trade and Among Consumers

The domestic economy performed slightly positively at the start of the year. According to the WIFO Flash Estimate, GDP grew by 0.2 percent in volume terms in the first quarter of 2026 (compared with the previous quarter; seasonally and calendar-adjusted). Consumer demand from private households made a positive contribution to growth. In terms of monthly trends (according to the Weekly WIFO Economic Index – WWWI), a slight downturn was again evident in the first three weeks of April following the positive start to the year.

According to the flash estimate by Statistics Austria, inflation rose again in April 2026 (3.3 percent; March 3.2 percent). As a result of the war in Iran, energy prices rose significantly (+10.7 percent year-on-year).

According to preliminary data, turnover in domestic retail trade (excluding motor vehicles) showed moderate growth in March 2026 (value +1.9 percent, volume 0.0 percent year-on-year, calendar-adjusted, preliminary figures). Unadjusted, the result for March is slightly stronger, as some days of Holy Week fell in March.

The rise in uncertainty following the war in Iran was reflected promptly in the survey data. However, the immediate downturn in sentiment was less pronounced than at the outbreak of the war in Ukraine in February 2022.

The confidence among Austrian retailers cooled between February and April, primarily due to a deterioration in expectations for the coming months. The current assessment of the situation still shows a balance between optimistic and pessimistic responses.

Austrian consumers have reacted much more strongly in their assessments. The economic outlook for the coming months, their own financial situation, expectations regarding consumer prices and job security are all under particularly heavy strain.

Moderate consumer demand is expected for 2026. Both the rising cost of fossil fuels and the federal government's budget consolidation are having dampening effects. The savings rate is likely to decline further.

In the labour market, the decline in the number of unfilled vacancies continued. In the retail trade, these fell again by double digits year-on-year in April. In the total economy, the negative trend has eased somewhat, with vacancies falling by around 6 percent in April. In April 2026, 8,453 vacancies in the retail trade (including motor vehicles, according to NACE 2025) could not be filled promptly; in the total economy, the figure was 77,157.

In terms of employment, however, March saw an increase in the retail trade (including motor vehicles, according to NACE 2025) for the first time since February 2023. A slight increase was also observed in the total economy.

The number of new corporate insolvencies remains high, even though it has fallen for the second time since the second quarter of 2023. In the first quarter of 2026, the total number of insolvency proceedings opened was 1,045, which was 7.8 percent fewer than in the previous year.