GDP is expected to increase by 0.1% this year. According to national accounts, GDP contracted by 1.9% in the first half of the year, impacted by negative effects from foreign trade and changes in inventories, partly due to a shock in marine exports. Growth is anticipated in the latter half of the year, with a projected recovery in foreign trade and moderate growth in private consumption. In 2025, 2.4% growth is forecast, based on continued private consumption growth, improvement in foreign trade, and positive contributions from gross capital formation. Growth is expected to be 2.7% in 2026, based on a broad foundation.
Inflation is projected to continue easing over the coming years as the economy has cooled, and monetary policy remains tight. The Icelandic krona has strengthened in recent months, inflation abroad has declined, and global oil prices have fallen. Moderate long-term wage agreements also support the easing of inflation. The Consumer Price Index is forecast to rise by an average of 5.9% this year and 3.8% in 2025, with inflation expected to average 2.7% in 2026. Unemployment is expected to increase alongside slower economic activity, averaging 3.7% this year and 4.1% next year. Real wages have risen this year, and the wage index adjusted for inflation is expected to increase by 0.5% this year and 1.8% next year.
The last economic forecast was published on the 28th of June 2024. The next forecast is scheduled for March 2025.
Economic forecast — Statistical Series