Strong growth of private consumption and investment propel GDP growth of 4% in 2016 and 3.1% in 2017.
A new issue of Statistical Series, presenting the economic forecast for 2016 -2021, is now available. Iceland's economy is predicted to grow by 4% in 2016 and 3.1% in 2017 followed by yearly growth of 2.7 - 2.9%. GDP growth in 2015 is estimated to have been 4.2%.
Consumption and investment drive growth in the early years of the forecast period. In 2016 private consumption is expected to increase by 5.2% and investment by 13.2%. In 2017 private consumption is expected to grow by 4.2% and investment by 7.7%.
During 2018 through 2021 the forecast calls for yearly GDP and private consumption growth of nearly 3%, while investment growth will decline. Public consumption is predicted to grow by 1.2 – 1.6% per annum for the entire forecast period. Public investment will contract in 2016 but grow modestly in 2017 – 2021.
The trade surplus contracts in the early years when consumption and investment growth peak and remains stable in the later years.
Depressed oil and commodity prices along with low trading partner inflation and appreciation of the króna have kept inflation in check. Inflation is forecast at 2.5% in 2016, is expected to rise to 3,9% in 2017 and decline during 2018 – 2021.
Collective wage agreements were reached for most employees in 2015. However the bargaining season did not come to a close until renegotiation of private sector contracts was finalised in January of 2016. As a result, wages have increased sharply and will also increase substantially in 2016 and 2017.
The last economic forecast was published on November 13th in 2015. The next forecast is scheduled for May 2016.
Economic forecast, winter – revision - Statistical Series