The economic boom Icelanders have been enjoying for the past few years has not fueled growing consumption, but has instead been used to pay down debts, data from Statistics Iceland shows. Private consumption in 2016 was 49% of GDP, which is a less than at any time since 1945.
Household debt rose as a share of GDP in the lead-up to the 2008 financial crash. In 2003 household debt was 90% of GDP, compared to 124% in 2009, when it peaked. Since then, however, consumers have been paying down debt. In 2017 household debt amounted to just 76% of GDP. Ásgeir Jónsson, an economist with the University of Iceland told the local newspaper Viðskiptablaðið that this is the first time since 1980 that an economic boom is not associated with rising household debt.
Read more: Left-Green led Grand Coalition unveils first budget: Debt to drop below 25% of GDP
At the same time as Icelanders have been paying down debts consumption has been shrinking as a share of GDP. During 1980-2007 private household consumption amounted to 58.4% of GDP on average. Since the crash, however, it has shrunk to an average 51.6% in 2009-16. In 2016 it was just 49% of GDP, the lowest level since 1945 when Statistics Iceland began compiling its National Accounts.
The economic boom Icelanders have been enjoying for the past few years has not fueled growing consumption, but has instead been used to pay down debts, data from Statistics Iceland shows. Private consumption in 2016 was 49% of GDP, which is a less than at any time since 1945.
Household debt rose as a share of GDP in the lead-up to the 2008 financial crash. In 2003 household debt was 90% of GDP, compared to 124% in 2009, when it peaked. Since then, however, consumers have been paying down debt. In 2017 household debt amounted to just 76% of GDP. Ásgeir Jónsson, an economist with the University of Iceland told the local newspaper Viðskiptablaðið that this is the first time since 1980 that an economic boom is not associated with rising household debt.
Read more: Left-Green led Grand Coalition unveils first budget: Debt to drop below 25% of GDP
At the same time as Icelanders have been paying down debts consumption has been shrinking as a share of GDP. During 1980-2007 private household consumption amounted to 58.4% of GDP on average. Since the crash, however, it has shrunk to an average 51.6% in 2009-16. In 2016 it was just 49% of GDP, the lowest level since 1945 when Statistics Iceland began compiling its National Accounts.
