Iceland Economic Outlook
August 27, 2019While firm GDP figures are still outstanding, Q2 was likely a quarter to forget for Iceland’s economy. Tourist arrivals plunged year-on-year in the period, hit by WOW Air’s bankruptcy, while the unemployment rate spiked and real wage growth fell to a multi-year low—likely having a knock-on effect on private consumption. Moreover, the total fish catch fell roughly 20% in annual terms on lower fish stocks, which likely hurt the external sector. Early signs for the third quarter are similarly downbeat: In July, tourist arrivals fell by double digits and wage growth moderated further relative to the Q2 average. More positively, the total fish catch edged up in July, while recent Central Bank easing should be providing some support to domestic activity.
Iceland Economic GrowthPanelists see the economy nearly flatlining this year on turbulence in the tourism sector, which will hit employment and construction, and a disappointing fish catch in H1. However, the weaker krona, a looser monetary stance and fiscal support should prop up activity. A possible sharper-than-expected tourism downturn, Brexit and slowing global growth pose downside risks. FocusEconomics panelists expect GDP to rise 0.1% in 2019, which is unchanged from last month’s forecast, and 2.1% in 2020.
Iceland Economy Data
5 years of Iceland economic forecasts for more than 30 economic indicators.
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|Bond Yield||3.66||-0.99 %||Sep 04|
|Exchange Rate||126.2||-0.52 %||Sep 04|
|Stock Market||1,437||-0.32 %||Sep 04|
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