Please note that statistics on the production approach in national accounts have been corrected due to an error. The error did not affect the news release.
Gross domestic product (GDP) is estimated to have decreased by 5.1% in volume in the fourth quarter of 2020 compared with the same period last year. In the year 2020, GDP is estimated to have decreased by 6.6% in volume. This decrease can largely be attributed to the effects of the Covid-19 pandemic, especially in regards to tourism exports which have decreased by 74.4% during the year compared with 2019. The share of tourism in GDP is estimated at 3.5% in 2020, compared with 8.0% in 2019.
National accounts figures for 2020
Preliminary estimates of annual national accounts indicate a 6.6% decrease in GDP in 2020. Gross domestic final expenditure (GDFE), the aggregate of household and government final consumption expenditure and gross fixed capital formation, is projected to have decreased by 1.9% from 2019. Government final consumption expenditure (GFCE) has decreased by 3.1 %, household final consumption expenditure (HFCE) by 3.3% and gross fixed capital formation (GFCF) by 6.8%, compared with 2019.
| Gross Domestic Product 2015-2020 | ||||||
| Million ISK, current prices | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Private final consumption | 1,148,117 | 1,237,722 | 1,323,510 | 1,429,927 | 1,519,690 | 1,512,162 |
| Government final consumption | 541,371 | 578,018 | 625,544 | 686,635 | 744,096 | 808,804 |
| Gross fixed capital formation | 446,757 | 525,915 | 575,221 | 614,094 | 627,783 | 619,787 |
| Changes in inventories | 1,632 | 3,724 | -821 | 10,409 | -288 | 17,380 |
| Gross domestic final expenditure | 2,137,875 | 2,345,379 | 2,523,453 | 2,741,065 | 2,891,282 | 2,958,134 |
| Exports of goods and services | 1,193,593 | 1,192,825 | 1,208,227 | 1,326,743 | 1,350,758 | 1,002,774 |
| Less: Imports of goods and services | 1,020,620 | 1,026,149 | 1,089,721 | 1,227,719 | 1,196,890 | 1,020,270 |
| Gross Domestic Product | 2,310,848 | 2,512,055 | 2,641,959 | 2,840,089 | 3,045,149 | 2,940,638 |
| Volume changes, % | ||||||
| Private final consumption | 4.5% | 6.7% | 8.0% | 4.8% | 1.9% | -3.3% |
| Government final consumption | -0.1% | 0.9% | 2.9% | 4.7% | 3.9% | 3.1% |
| Gross fixed capital formation | 21.5% | 18.0% | 10.6% | 1.2% | -3.7% | -6.8% |
| Changes in inventories | -0.1% | 0.1% | -0.2% | 0.4% | -0.4% | 0.5% |
| Gross domestic final expenditure | 6.3% | 7.7% | 7.1% | 4.3% | 0.7% | -1.9% |
| Exports of goods and services | 8.9% | 11.0% | 5.1% | 1.7% | -4.6% | -30.5% |
| Less: Imports of goods and services | 13.5% | 14.6% | 11.8% | 0.5% | -9.3% | -22.0% |
| Gross Domestic Product | 4.4% | 6.3% | 4.2% | 4.7% | 2.6% | -6.6% |
Largest contribution to the fall in GDP comes from external trade
The decrease in GDP can largely be contributed to the negative effects of external trade. Imports decreased by 22.0% during the year 2020, while exports decreased by 30.5%, compared with 2019.
Exports of goods decreased by 8.5% during the year while the decreased in exports of services amounted to 51.2% in 2020 compared with 2019. Imports of goods decreased by 12.5% in 2020 and imports of services by 38.5%. The deficit in the balance of trade in goods and services was negative by 17.5 billion ISK in 2020, compared with a surplus of 153.9 billion ISK in 2019, at current prices.
The share of tourism in GDP is estimated at 3.5% in 2020
According to preliminary figures from the Tourism Satellite Accounts (TSA), the share of tourism in GDP is estimated to be 3.5% in 2020, compared with 8% in 2019. This is the first time Statistics Iceland publishes the estimated share of tourism in parallel with the first estimates of last year’s GDP figures. A TSA publication for the years 2009-2020 is scheduled for June 2021.
The TSA is a satellite to the system of national accounts and is intended to assess the share of tourism in the economy and its development as an industry. The TSA cover the tourism expenses of foreign as well as domestic tourists.
Household final consumption expenditure decreased by 3.3%
According to estimates, the HFCE fell by 3.3% in volume in 2020 compared with the previous year. Measurement reflect the effects of the COVID-19 pandemic on the consumption pattern of Icelandic households. For 2020, it is estimated that direct purchases abroad by resident households decreased by 65.2% in volume from the previous year and amounted to 62.9 billion ISK in 2020 compared with 161.9 billion ISK in 2019. Despite this decrease in direct purchases abroad, as well as in a few categories of expenditure in domestic consumption, an increase in other categories has largely offset the fall. For example, purchases of furniture and other household equipment is estimated to have increased in real terms by 7.6% in 2020 and purchases of alcohol and tobacco by 10.8%, compared to 2019.
Government final consumption increased by 3.1% in 2020
Government final consumption increased by 3.1% in volume in 2020 compared with 3.9% in 2019. Public finance statistics for the fourth quarter of 2020 and preliminary results for 2020 will be published on 11 March 2021.
A decrease in all components of capital formation in 2020
Gross fixed capital formation is estimated to have decreased by 6.8% in volume in 2020 compared with the previous year. Business sector investment is estimated to have decreased by 8.7%, government investment by 9.3% and residential investment (GFCF in dwellings) by 1.2%. Based on data from Registers Iceland on the state of construction at the end of the year, figures on residential investment in the first three quarters of 2020 have been revised. The revision does not affect the results for the year as a whole, only the distribution within its quarters. Despite the fact that the increase in the number of completed constructions of residential real estate has not been greater since 2007, or almost 4 thousand apartments in 2020, residential investment decreased by 1.2% in 2020 compared with the previous year. This is due to a decrease in the number of residential real estate in other construction stages compared with 2019.
Since the year 2000, residential investment has amounted to 4.1% of GDP on average, but dropped to 2.1% of GDP in 2010. In 2020, residential investment amounted to 5.7% of GDP.
Increase in stock
According to inventory reports, the total value of inventories increased significantly in 2020, or by 17.4 billion ISK at current prices. The largest increase was in the stock of marine products and aluminium, while a decrease was measured in the stock of oil and in the stock of ferrosilicon and other supplies.
GDP per capita decreased by 8.2%
GDP per capita is estimated to have decreased by 8.2% in volume, taking into account a 1.7% population growth in 2020. This is the largest decrease in GDP per capita measured in Iceland since the beginning of GDP per capita measures in 1946.
GDP by industries
In parallel with the publication of national accounts on the basis of the expenditure approach, figures based on the production approach are published. Figures based on the production approach show, among other things, the share of individual industries in GDP. According to the production approach, figures for and up to 2018 are considered final, figures for 2019 are considered preliminary and figures for 2020 are first estimates.
National accounts figures for fourth quarter of 2020
GDP is estimated to have decreased by 5.1% in volume in the fourth quarter of 2020 compared with last year’s corresponding quarter. Household final consumption expenditure is estimated to have decreased by 3.1% in volume in the fourth quarter of 2020 compared with the same quarter of 2019, decrease in gross fixed capital formation is estimated at 4.6% while an increase in government final consumption expenditure is estimated at 2.8% in volume in the fourth quarter compared with last year’s corresponding quarter. Taking into account changes in inventories, gross domestic final expenditure is estimated to have decreased by 2.0%.
Due to a greater decrease in exports than imports in the fourth quarter of 2020, external trade contributes negatively to GDP growth. The surplus in the balance of trade in goods and services was 10.9 billion ISK during the period.
Seasonally adjusted GDP increased by 4.8%, in volume, in the fourth quarter of 2020 compared with the third quarter of 2020. Household final consumption decreased by 0.9% during the period compared with the previous quarter, government final consumption increased by 0.6% and gross fixed capital formation increased by 3.8%. During the same period seasonally adjusted exports increased by 19.2% while imports increased by 4.6% compared with the previous quarter of the same year.
| Quarterly national accounts, 4th quarter of 2020 | |||
| Current prices million ISK | Volume change on the same period of the previous year, % | Volume change from previous quarter, % | |
| 4th quarter | 4th quarter | 4th quarter | |
| Private final consumption | 398,444 | -3.1 | -0.9 |
| Government final consumption | 217,773 | 2.8 | 0.6 |
| Gross fixed capital formation | 164,371 | -4.6 | 3.8 |
| Changes in inventories | -5,579 | -0.2 | … |
| Gross domestic final expenditure | 775,009 | -2.0 | 0.5 |
| Exports of goods and services | 276,872 | -25.0 | 19.2 |
| Imports of goods and services | -265,936 | -20.0 | 4.6 |
| Gross domestic product | 785,945 | -5.1 | 4.8 |
Revised figures
The general rule for the revision of the figures of national accounts is that when the annual figures are published, in February and August, the results of the previous three-year period are open for a revision. Older published figures are considered final but time series can be revised if necessary, e.g. due to a change in methodology.
In parallel with the publication of first estimates for 2020, figures for the last three years have been revised on the basis of more detailed information. The biggest impact of the revision is on GDP in 2019, according to which GDP increased by 2.6% in volume compared with 1.9% according to previously published figures.
