Gross domestic product is estimated to have decreased by 0.3% in real terms in the second quarter of 2024 compared with the same period last year. The decline is attributed to shifts in trade in goods and services, along with a decrease in private consumption.
Private consumption is estimated to have decreased by 0.9%, while public consumption is believed to have increased by 2.7%, gross fixed capital formation by 4.6% and changes in inventories by 0.6%. As a result, national expenditure, i.e., the total of consumption expenditure and gross fixed capital formation, increased by 2% in real terms from the same period last year.
Adjusted for seasonal fluctuations, it is estimated that the GDP has increased in real terms by 1.7% between the first and second quarter of 2024.
During the first six months of 2024 it is estimated that GDP decreased by 1.9% in real terms compared with GDP for the first six months of 2023.
Contribution of external trade weighed heavily on the contraction
The increased deficit in trade in goods and the reduced surplus in trade in services led to a negative balance of goods and services of just over 22 billion ISK in the second quarter. The balance of goods and services was positive during the same period in 2023, and this shift has resulted in external trade contributing a negative impact of 3% of GDP.
Private consumption decreased by 0.9%
Private consumption decreased by 0.9% in real terms in the second quarter compared with the same period last year. The most significant factor was a substantial decline in the consumption of durable goods, such as car purchases, as in the first quarter. Additionally, there was a general reduction in household spending on services. In the second quarter, Icelanders' consumption abroad decreased by 3% in real terms, while domestic consumption (of non-durable goods) increased slightly.
Public consumption increased by 2.7%
The volume change in public consumption from the second quarter of 2024 compared with the same period in 2023 is estimated at 2.7%. The results for government finances for the second quarter of 2024 will be published on September 12.
Gross fixed capital formation increased by 4.6%
Overall, the results show that gross fixed capital formation increased by 4.6% in real terms in the second quarter of 2024 compared with the same period last year. It is estimated that capital formation in the business sector increased by 7.1% and residential construction by 3.4%, while public sector activities decreased by 4.3%, mainly in municipal capital formation.
Inventories declined
In the second quarter, the total value of inventories decreased by 12.8 billion ISK at the year's price level between consecutive quarters. This decrease is primarily attributed to a reduction in the inventory levels of marine products by 17.8 billion ISK, partially offset by increases in other inventory categories.
The amount of hours worked increased by 4.7% year-on-year
It is estimated that the total number of hours worked increased by 4.7% in the second quarter of 2024 compared with the same period in 2023, while the number of employed persons rose by 2.3%.
Seasonally adjusted GDP increased by 1.7%
Seasonally adjusted gross domestic product (GDP) grew by 1.7% in real terms between the first and second quarter of 2024. During this period, seasonally adjusted private consumption decreased by 0.8%, while government consumption increased by 0.9% and gross fixed capital formation grew by 9%. At the same time, seasonally adjusted exports contracted by 0.1%, whereas imports increased by 0.5% in real terms.
Updated national accounts results for 2021-2023
In conjunction with the publication of national accounts for the second quarter of 2024, Statistics Iceland is now releasing provisional figures* for the year 2023. Estimated GDP based on quarterly accounts was previously published on February 29. According to the provisional figures for 2023, GDP amounted to 4,321 billion ISK, representing a real increase of 5% from the previous year, compared with 9% the year before. Taking into account population growth, which amounted to 2.5%, GDP per capita increased by 2.4% in real terms in 2023.
Revised national accounts results for 2021, 2022, and 2023
The national accounts results for the years 2021, 2022 and 2023 have also been revised. The general rule for revising national accounts is that when annual figures are released in February and August, the results for the past three years (2021-2023) are subject to revision. Older results are considered final, although time series further back may be revised if necessary, for example, due to changes in methodology.
Production approach
Figures based on the production approach will be published in September.
*Approximately two months after the reference year ends, Statistics Iceland publishes estimated GDP for the fourth quarter of the previous year, along with the first provisional estimate for annual GDP. This estimate represents the aggregation of quarterly measurements according to the expenditure approach. The first results, defined as provisional estimates, are published approximately eight months after the reference year ends. National accounts results are classified as provisional estimates until about 26 months after the reference year ends but may still be subject to revisions as necessary.