Iceland Economic Outlook
September 28, 2021The economy rebounded sharply in Q2, growing 7.3%—the fastest rate in nearly four years—and contrasting the 0.2% contraction clocked in Q1. A strong acceleration in private consumption growth spearheaded the upturn, while a sharp rebound in fixed investment and robust public spending growth also bolstered the overall reading. Turning to Q3, demand dynamics have likely continued to improve, as evidenced by double-digit growth in both merchandise exports and imports during July–August. Moreover, tourist arrivals grew strongly in the same period, while the unemployment rate fell to an 18-month low in August, likely bolstering private consumption in the quarter. In politics, the country’s ruling coalition retained its majority in the parliamentary elections held on 26 September, with talks between the three associated parties set to take place over the coming weeks to form a government.
Iceland Economic GrowthThis year, the economy is set to regain some of last year’s losses, before GDP growth accelerates in 2022: Higher private spending and a stronger external sector should drive the improvement, although lingering uncertainty over the evolution of the pandemic and its associated restrictions could continue to impact the all-important tourism industry next year. FocusEconomics panelists see the economy growing 3.5% in 2021 and 4.7% in 2022, which is down 0.3 percentage points from last month’s forecast.
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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