VIENNA, Reuters – Russia’s invasion of Ukraine has prompted Austria’s central banks to reduce its growth forecasts and dramatically increase its inflation outlook this year. It said Wednesday that these figures assume the war will soon end.

Austrian National Bank (ONB), lowered its GDP growth forecast from 4.3% in December to 3.5% in order to lower its expectations. The bank raised its inflation outlook to 5.3%, from 3.2%.

Robert Holzmann, ONB Governor said that the war’s impact and future prospects will drive the economy.

Also, the central banks cut their growth projection for next year to 2.2% (from 2.6%), and stated that they were “based on the assumption of a timely ending of war.”

“Alternative scenarios – assuming protracted and escalating hostilities and enlarged sanctions and reflecting a reduction of gas supplies from Russia – yield much higher output and inflation effects,” it added.

Two scenarios were presented in a slide that was shown at an ONB news conference. Inflation rose to 9.9% in the worst case scenario, while growth plummeted to 0.4%. In contrast, the milder one had a slower growth rate of 1.9% while inflation rose to 7.6%.

The ONB stated that the impact of war on the headline scenario that showed 3.5% growth in this year’s forecast was responsible for roughly half the 0.8 percent reduction to growth and about a quarter the 2.1 point increase to inflation forecast.