In real terms, Gross Domestic Product (GDP) for the first nine months of 2019 increased by 0.2% compared with the same period of 2018. Non-seasonally adjusted figures indicate a 0.1% decrease in GDP in the 3rd quarter of 2019. External trade contributes negatively to the economic growth in the 3rd quarter of 2019 due to a greater decrease in exports than imports, especially due to a decrease in export of services.
Seasonally adjusted GDP in the 3rd quarter of 2019 decreased by 0.7% from the previous quarter.
Slight decrease in quarterly GDP in 3rd quarter of 2019
Gross Domestic Final Expenditure (GDFE) increased by 3.2%, Household Final Consumption Expenditure (HFCE) increased by 2.1%, Government Final Consumption Expenditure (GFCE) increased by 2.9% and Gross Fixed Capital Formation (GFCF) increased by 2.9% year on year in Q3 2019. Inventories increased by 9 billion ISK at current prices. The main factor is the increase in inventories of seafood products. Despite an increase in GDFE, non-seasonally adjusted figures indicate a year on year decrease of 0.1% in real GDP in the 3rd quarter of 2019, mainly explained by the negative impact of foreign trade on economic growth, in particular the decrease in exports of services. The largest single item in the exports of services is tourism.
| Quarterly national accounts, 3rd quarter of 2019 | ||||
| Current prices million ISK | Volume change on the same period of the previous year, % | Volume change from previous quarter,% | ||
| 3rd quarter | 3rd quarter | 1st - 3rd quarter | 3rd quarter | |
| Private final consumption | 368,420 | 2.1 | 2.0 | 1.1 |
| Government final consumption | 176,151 | 2.9 | 2.8 | 0.6 |
| Gross fixed capital formation | 168,965 | 2.9 | -9.1 | 0.5 |
| Changes in inventories | 9,081 | 1.0 | … | … |
| Gross domestic final expenditure | 722,618 | 3.2 | -0.9 | 1.2 |
| Exports of goods and services | 373,978 | -12.9 | -6.8 | -3.6 |
| Imports of goods and services | -318,511 | -8.6 | -9.7 | 0.7 |
| Gross domestic product | 778,085 | -0.1 | 0.2 | -0.7 |
Decreased surplus in foreign trade
Exports of goods and services decreased by 12.9% in the 3rd quarter of 2019 compared with the same period in 2018. Imports of goods and services decreased by 8.6% over the same period. The surplus in the balance of trade in goods and services in the 3rd quarter of 2019 was 55.5 billion ISK according to preliminary figures, compared with a 75.8 billion ISK surplus in the 3rd quarter of 2018, at current prices.
The deficit in the balance of trade in goods was 45.8 billion ISK in the 3rd quarter of 2019. Total exports of goods were 151.4 billion ISK and imports of goods 197.3 billion ISK. The surplus in trade in services was 101.3 billion ISK. Total exports of services were 222.6 billion ISK and total imports of services 121.3 billion ISK.
Increased capital formation restricted to residential investment
GFCF increased by 2.9% in Q3 2019 from last year’s corresponding quarter. Business sector investments decreased by 5.4% during the same period and the contraction in government investment was measured 16.5%. An increase in Residential investment (GFCF in dwellings), however, measured 53.6% in the third quarter, compared with a 3.3% decrease in the same period in 2018. In the first nine months of 2019, residential investment increased by 38% in real terms, compared to the first nine months of 2018.
Continued slow growth in Household Final Consumption Expenditure
HFCE increased by 2.1% in real terms in the third quarter of 2019, but in the last nine months HFCE has increased by 2% in real terms compared to the same period last year. In comparison, annual growth in HFCE was 5.5% on average over a five-year period, from 2014 to 2018.
GDP increased by 0.2% in the first three quarters of 2019
In real terms, non-seasonally adjusted GDP for the first three quarters of 2019 increased by 0.2% compared with the same period in 2018. Total GDFE decreased by 0.9%. HFCE increased by 2.0%, GFCE by 2.8% and GFCF decreased by 9.1%. Concurrently, exports decreased by 6.8% while imports decreased by 9.7%.