The Icelandic economy is projected to grow by 4.3% in 2017, according to a new issue of the Statistical Series of Statistics Iceland. The series forecasts that the growth will slow down to 2.5%-3% in 2018-2022.The series include a new revision of the growth in 2016, which Statistics Iceland now estimates at 5.9%.
Growing exports, thanks to tourism
The drivers of economic growth are private consumption, investment and external trade. Exports increased by 9.5% last year, driven by an increase in the exports of services, thanks to tourism. Exports are expected to increase by 9.9% this year.
Despite a booming economy and rising wages inflation has remained low, remaining below the Central Bank‘s target rate for three consecutive years.
Zero inflation when housing is excluded
Excluding housing there has been virtually no inflation during the period. However, real house prices have increased markedly in the recent years, and quite sharply during the last six months.
Read more: Real estate prices in Iceland projected to rise by 30% by the end of 2019
Rising prices are driven by real developments, rather than speculation, as population and tourism have created intense demand pressures on the housing market. Residential construction growth has picked up and is predicted to remain high in the coming years.
The Icelandic economy is projected to grow by 4.3% in 2017, according to a new issue of the Statistical Series of Statistics Iceland. The series forecasts that the growth will slow down to 2.5%-3% in 2018-2022.The series include a new revision of the growth in 2016, which Statistics Iceland now estimates at 5.9%.
Growing exports, thanks to tourism
The drivers of economic growth are private consumption, investment and external trade. Exports increased by 9.5% last year, driven by an increase in the exports of services, thanks to tourism. Exports are expected to increase by 9.9% this year.
Despite a booming economy and rising wages inflation has remained low, remaining below the Central Bank‘s target rate for three consecutive years.
Zero inflation when housing is excluded
Excluding housing there has been virtually no inflation during the period. However, real house prices have increased markedly in the recent years, and quite sharply during the last six months.
Read more: Real estate prices in Iceland projected to rise by 30% by the end of 2019
Rising prices are driven by real developments, rather than speculation, as population and tourism have created intense demand pressures on the housing market. Residential construction growth has picked up and is predicted to remain high in the coming years.
