Gross domestic product (GDP) is estimated to have increased by 4.4% in volume in the fourth quarter of 2021 compared with the same period last year. In the year 2021, GDP is estimated to have increased by 4.3% in volume. Considering population growth, GDP per capita is estimated to have increased by 2.5% in volume between 2020 and 2021.
National Accounts figures for 2021
Statistics Iceland now publishes its preliminary estimates of the national accounts for the year 2021. GDP in 2021 amounted to 3,233 billion ISK. When change in prices are considered, GDP is estimated to have increased by 4.3% in volume, compared with a 7.1% decrease in the previous year. At the same time, gross domestic final expenditure (GDFE), the aggregate of household and government final consumption expenditure and gross fixed capital formation, is estimated to have increased by 7.2% in volume. Household final consumption expenditure (HFCE) increased by 7.6%, gross fixed capital formation (GFCF) by 13.6% and government final consumption expenditure (GFCE) by 1.8%. Due to a greater increase of imports than of exports, the contribution of external trade to economic growth during the period was negative. Despite the fact that the decrease in GDP in 2020 has reversed to a considerable extent in 2021, GDP in this year is still 3% lower in volume than in 2019, prior to the COVID-19 pandemic.
GDP per capita increased by 2.5%
According to estimates, the population growth in 2021 amounted to 1.8% compared with the previous year. Considering population trends, GDP per capita is estimated to have increased by 2.5% in volume in 2021 compared with 2020 and is still 6.2% lower in volume than in 2019.
External trade contributes negatively to economic growth
Exports are estimated to have increased by 12.3% in volume in 2021 compared with the previous year. The increase in exports of services was 20.3% during the year, while exports of goods increased by 7.6% during the same period. Imports increased by 20.3% in 2021 compared with 2020, imports of goods by 21% and imports of services by 18.6%. Due to a greater increase of imports than the increase of exports, the contribution of external trade as a whole to economic growth during the period was negative. The deficit in the balance of trade in goods and services amounted to 68.8 billion ISK in 2021, compared with a deficit of 22.3 billion ISK in 2020, at current prices.
Increased household consumption
Household final consumption expenditure is estimated to have increased by 7.6% in volume in 2021, compared with a 2.9% decrease in 2020. Changes in prices considered, it is estimated that household consumption in 2021 has grown by 4.4% in volume since 2019, prior to the Covid-19 pandemic. In 2021 it is estimated that direct purchases abroad amounted to 84.7 billion ISK at current prices, an increase of 29.2% in volume from the previous year. Household purchases of automobiles are estimated to have increased by close to 34% in volume in 2021 compared with 2020, but a significant increase is also estimated in other consumption expenditure categories, such as household purchases of clothing, medicine and other medical products.
Government consumption expenditure increased by 1.8% in 2021
Government final consumption expenditure is estimated to have increased by 1.8% in volume in 2021 compared with a 4.2% growth in 2020. Results on public finances for the fourth quarter of 2021 and preliminary results for the year 2021 will be published on 10 March 2022.
Investment increased by 13.6%
fixed capital formation is estimated to have increased by 13.6% in volume in 2021 compared with 2020. The increase in business sector investment is estimated at 23.1%, and government investment is estimated to have increased by 12.4% in volume over the same period.
It is estimated that residential investment (GFCF in dwellings) amounted to 177.4 billion ISK in 2021, compared with 171.9 billion ISK in 2020 at current prices. Considering changes in prices, residential investment is estimated to have decreased by 4.4% in volume in 2021 compared with 2020. Despite a decrease between years, residential investment has been strong, in the historical context, over the past three years. Since 2001, residential investment has amounted to 4.1% of GDP on average, compared with 5.5% of GDP in 2021.
According to data from the Registers Iceland, the number of completed residential real estate (at the final construction stage) in Iceland increased by almost 3,200 in 2021, but in 2020 it increased by more than 3,800. At the end of 2020, there were 1,400 registered real estate at construction stage 1, but by the end of 2021, it was more than 3,000. Based on data from the Registers Iceland on the state of construction at the end of the year, figures on residential investment for Q1-Q3 have been revised. The revision does not affect the results for the year as a whole, but the distribution within the year changes from previously published results.
Increase in stock
According to inventory reports, the total value of inventories increased by 4.7 billion ISK in 2021, at current prices. The largest increase was in the stock of aluminium and oil, while a decrease was measured in the stock of marine products.
Share of individual industries in GDP
The results of the production approach of the national accounts, which show, among other things, the share of individual industries in GDP, will be published on 4 March 2022.
National Accounts figures for the fourth quarter of 2021
GDP is estimated to have increased by 4.4% in volume in the fourth quarter of 2021 compared with the same period last year. Considering changes in inventories, gross domestic final expenditure is estimated to have increased by 10.9% in volume during the period, household final consumption expenditure by 12.9%, government final consumption expenditure by 1.5% and gross fixed capital formation by 13.8%. Due to a greater increase in imports than exports, external trade contributes negatively to GDP growth. The total deficit in the balance of trade in goods and services is estimated at 18.6 billion ISK during the period.
Seasonally adjusted GDP increased in volume by 2.2% in the fourth quarter of 2021 compared with the third quarter of the same year. Seasonally adjusted, there was a 4% increase in household final consumption during the fourth quarter compared to the previous quarter, a 0.5% increase in government final consumption and a 2% increase in gross fixed capital formation. During the same period, seasonally adjusted exports increased by 8.6% while imports increased by 8.9%.
Increase in the number of employed persons by 8.9% and hours worked by 6.1%
s estimated that the total number of hours worked increased by 6.1% in the fourth quarter of 2021 compared with the same period in 2020, but the number of employed persons increased by 8.9% during the same period. Despite an increase in the number of employed persons between years, it is estimated that the number of hours worked in the fourth quarter of this year was 1.2% less than in the fourth quarter of 2019.
Revised figures
general rule for the revision of national accounts is that when the annual figures are published, in February and August, the results of the previous three years are open for a revision. Older published figures are considered final, but time series can be revised if considered necessary, e.g. due to a change in methodology.
In parallel with the publication of first estimates for 2021, figures for the last three years have been revised on the basis of more detailed information, including on investment. The biggest impact of the revision is on GDP in 2020, according to which GDP decreased by 7.1% in volume, compared with a 6.5% decrease according to previously published figures.