A new issue of Statistical Series, presenting the economic forecast for 2018-2024, is now available.

Revised numbers from the national accounts estimate that Iceland‘s GDP grew by 4% last year, an increase from the previous 3.6% preliminary estimate. The outlook for the year 2018 has changed from the one presented in June with GDP expected to grow by 3.8%, but expectations for the following years are similar to the ones presented in June with growth around 2.6% per annum during 2019-2024. Growth will mostly be driven by private consumption.

After a period of strong growth in private consumption in the years 2016 and 2017, indications point to a relatively strong growth in 2018 but modest in the years to come as the economy slows down. In 2018 the growth in private consumption is expected to be about 4.9%, 3.8% in 2019 and declining to 2.5%-3% in 2020-2024. The growth in public consumption is expected to be robust in the year 2018 or 3.3% but is expected to be around 2% in the later years.

CPI-inflation has been below the Central Banks’s 2.5% target rate for the last four years but has been rising in the last few months. Inflation is expected to rise due to the weakening of the exchange rate and recent negative developments in the terms of trade. Annual rise in prices is expected to be 2.7% on average in the year 2018 and peak at 3.6% in 2019 before declining back towards the Central bank’s target rate at the end of the forecast horizon.

Economic forecast, summer 2018 — Statistical Series