A new issue of Statistical Series, presenting a revised economic forecast for 2016–2022, is now available.
Private consumption, investment and external trade are driving strong economic growth in Iceland. The latest national accounts available for the forecast include results up to the third quarter of 2016.
GDP is estimated to have grown by 5.9% in 2016 and is forecast to grow by 4.3% in 2017 and 2.5–3.0% per annum during 2018–2022. Private consumption is estimated to have grown by 7% in 2016 and is forecast to grow by 5.9% in 2017, 3.9% in 2018 and 2.5–2.9% per annum for the remainder of the forecast horizon. Public consumption growth will be close to 1.5% yearly throughout the forecast period.
Investment in 2016 is estimated to have grown by 22.7% and is expected to increase by 12.6% in 2017 but somewhat less during 2018–2022. Public investment is forecast to increase considerably in 2017 and 2018.
Appreciation of the krona has stopped, but that might change as tourism intensifies and marine exports resume if/when the fishermen‘s is resolved.
Headline inflation has remained below the Central Bank‘s target rate for three consecutive years and excluding housing there has been virtually no inflation during that period.
Real house prices have increased markedly in the recent years, and quite sharply during the last six months. Population and tourism growth are responsible for high housing demand. Residential construction growth has picked up and is predicted to remain high in the coming years.
Employment and real wage growth has been rapid. Most wage contracts run through 2018 but conditions for cancelling them may exist at the end of February.
The last economic forecast was published on the 4th of November 2016. The next forecast is scheduled for May 2017.