Gross domestic product (GDP) is estimated to have increased by 8.6% in volume in the first quarter of 2022 compared with the same period last year. Gross domestic final expenditure increased by 11.2% in volume during the quarter, where household final consumption expenditure increased by 8.8%, government final consumption expenditure by 1.5% and gross fixed capital formation is estimated to have increased by 20.3%.

A significant growth was measured in both imports and exports during the first quarter of 2022 compared with the same period last year. Due to a greater increase in imports than exports in the first quarter, external trade contributes negatively to GDP growth. The deficit in the balance of trade in goods and services amounted to 25.4 billion ISK during the period.

The recent economic recovery led to a strong increase in employment in 2021, which continued into the first quarter of 2022. Total employment, measured in total number of hours worked, rose by 7.5% from the same period last year and employed persons increased by 8.2% over the same period.

Seasonally adjusted GDP increased by 1.1% in volume in the first quarter of 2022 compared with the fourth quarter of 2021.

Household consumption increased by 8.8%
Household final consumption expenditure is estimated to have increased by 8.8% in volume year-over-year during the first quarter of 2022, which can largely be attributed to the increase in travel and in direct purchases abroad by resident households.

There was also a significant increase in household purchases of new vehicles during the period, but there was a decrease in other consumption categories, such as alcohol, furniture and furnishings, compared with last year’s corresponding quarter.

Government consumption increased by 1.5%
Government final consumption expenditure increased by 1.5% during the first quarter compared with last year’s corresponding quarter. Figures on public finances for the first quarter of 2022 will be published on 9 June 2022.

Investment increased by 20.3%
Overall, gross fixed capital formation is estimated to have increased by 20.3% in volume in the first quarter compared with the same period last year. Business sector investment increased by 38.3% during the period, but excluding capital formation in vessels, aircraft and large-scale industries, the growth measured 19.4%. The difference is mainly due to significant investments in aircrafts during the period, but a decrease was measured in the capital formation of large-scale industries during the period compared with last year’s corresponding quarter. Imports and exports of vessels and aircraft are reflected directly in investment and often affects the total amounts of investment and external trade significantly while the effect on GDP is minor, as the investment effect approximately corresponds to the effect on external trade.

It is estimated that residential investment amounted to 40.8 billion ISK during the period and decreased by 6.8% in volume compared with the first quarter of 2021. Moreover, it is estimated that government investment increased by 1.4% in volume in the same period.

Historical increase in external trade in services
Exports are estimated to have increased by 28.3% in volume in the first quarter of this year compared with the same period last year, while imports increased by 33.9% in volume.

Exports of services increased by 80.8% during the period, which is primarily explained by a large increase in the number of tourists coming to Iceland. According to a count of foreign passengers through Keflavík Airport, tourists amounted to 245 thousand during the period, compared with only 12 thousand during the same period in 2021. Significant growth was also measured in imports of services, or 68.7%. The increase in service imports is largely due to increase in travel and in direct purchases abroad by Icelanders, which fell in 2020 and 2021 due to the circumstances that arose with the spread of Covid-19 in Iceland and elsewhere. The increase in imports and exports of services is the highest it has been since the beginning of quarterly GDP measurements in Iceland.

It is estimated that imports of goods increased by 21.4% in volume during the quarter compared with last year’s corresponding quarter. The increase in imports of goods can be partly attributed to imports of aircraft registered in Iceland in the first quarter. The increase in exports of goods is estimated at 8.9% in volume during the first quarter, compared with the same period last year. The total deficit in the balance of trade in goods and services is estimated at 25.4 billion ISK in the first quarter of 2022, of which the deficit in the balance of trade in goods was 20 billion ISK and a deficit in the balance of trade in services of 5.4 billion ISK at current prices.

Increase in stock of inventories
According to inventory reports, the total value of inventories increased by 23.3 billion ISK, at current prices, in the first quarter of 2022 compared with the fourth quarter of 2021. The largest increase was in the stock of marine products, or 28.5 billion ISK at current prices, while the stock of oil and aluminium decreased by almost 5.5 billion ISK during the period.

Employment continued to rise in the first quarter
The total number of hours worked is estimated to have increased by 7.5% in the first quarter of 2022 compared with the same period in 2021, while the number of employed persons is estimated to have increased by 8,2% during the same period according to national accounts measurements. Despite an increase in total employment between the first quarter of 2022 and 2021, it is estimated that hours worked were 4.2% less in the first quarter of 2022 than in the first quarter of 2019, or before the effects of the Covid-19 pandemic were felt in the Icelandic economy.

Seasonally adjusted GDP increased by 1.1% between quarters
Seasonally adjusted GDP increased in volume by 1.1% in the first quarter of 2022 compared with the previous quarter, the fourth quarter of 2021. Seasonally adjusted, household consumption expenditure decreased by 0.1% during the quarter compared with the previous quarter, 0.5% increase in government consumption expenditure and a 0.4% increase in investment. During the same period, seasonally adjusted exports increased by 5.3% and imports by 3.3%.

Statistics