Iceland Economic Forecast

Iceland Economic Outlook

September 25, 2018

The economy performed well in the second quarter, according to data released by Statistics Iceland in September. Annual economic growth accelerated from the first quarter to reach a one-and-a-half-year high. The expansion was driven by strong private consumption, which benefited from low unemployment and solid wage growth. Moreover, fixed investment growth surged, particularly in terms of residential construction. On the other hand, government consumption increased at a weak pace, while the external sector had a lackluster performance. According to the same data, economic growth in 2017 was revised upwards from 3.6% to 4.0%.

Iceland Economic Growth

The economy is seen expanding at a slower rate this year and next, as the tourism sector loses steam and private consumption growth moderates. Furthermore, a strong króna could hinder the competitiveness of the external sector. Our panelists expect GDP to rise 3.3% in 2018 and 3.0% in 2019, which is unchanged from last month’s forecast.

Iceland Economy Data

20132014201520162017
Population (million)0.30.30.30.30.3
GDP per capita (USD)46,01251,67251,05159,52470,588
GDP (USD bn)15.017.017.020.024.0
Economic Growth (GDP, annual variation in %)4.32.24.37.53.6
Consumption (annual variation in %)0.83.24.77.17.8
Investment (annual variation in %)2.216.518.722.59.3
Exports (G&S, annual variation in %)6.73.29.210.94.8
Imports (G&S, annual variation in %)0.19.813.814.511.9
Retail Sales (annual variation in %)2.06.611.012.39.1
Unemployment Rate5.44.94.03.02.8
Fiscal Balance (% of GDP)-1.8-0.1-0.812.61.5
Public Debt (% of GDP)84.381.867.652.740.9
Inflation Rate (CPI, annual variation in %)3.92.11.61.71.8
Inflation (PPI, annual variation in %)-4.4-0.75.1-8.1-4.6
Policy Interest Rate (%)6.004.505.755.004.25
Stock Market (annual variation in %)27.510.638.0-6.74.7
Exchange Rate (vs EUR)158.5154.3141.3119.1124.3
Exchange Rate (vs EUR, aop)162.2154.9146.3133.7120.5
Current Account (% of GDP)5.94.05.37.73.7
Current Account Balance (USD bn)0.90.70.91.50.9
Trade Balance (USD billion)0.0-0.3-0.6-1.2-2.2

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Iceland Facts

ValueChangeDate
Bond Yield6.05-0.99 %Oct 16
Exchange Rate118.0-0.52 %Oct 16
Stock Market1,233-0.32 %Oct 16

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