Iceland Economic Outlook
December 20, 2019The economy contracted slightly in the third quarter after briefly recovering in the second quarter. Exports of goods and services plunged in Q3 on falling tourist arrivals, as the collapse of WOW air earlier this year continued to depress the tourism sector. On a more positive note, consumer spending picked up in Q3, while fixed investment recovered, buttressed by robust residential investment and despite declining business investment. Turning to the fourth quarter, the economy likely remained on a feeble footing. While fiscal stimulus and more accommodative monetary conditions should have fed through to domestic demand, ongoing uncertainty in the tourism sector likely continued to stall investment plans and drag on services exports. Moreover, the total fish catch, a key export earner, shrank sharply in annual terms in November.
Iceland Economic GrowthThe economy should recover in 2020 as a recovery in fixed investment and lower interest rates support domestic demand. Moreover, tourism should rebound modestly, barring further complications from the WOW air insolvency. Risks remain slanted to the downside due to Iceland’s vulnerability to external shocks. FocusEconomics panelists see GDP growth at 1.7% in 2020, which is down 0.1 percentage points from last month’s forecast, and 2.6% in 2021.
Iceland Economy Data
5 years of Iceland economic forecasts for more than 30 economic indicators.
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|Bond Yield||3.45||-0.99 %||Dec 31|
|Exchange Rate||121.1||-0.52 %||Jan 01|
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