The GDP of Iceland increased by 3.1% in real terms during the third quarter, compared to the same time the year before, new data from Statistics Iceland reveals. Seasonally adjusted GDP increased by 2.2% from the second quarter of this year. The economy has expanded by 4.3% during the first nine months of this year, compared to last year.
A strong Króna fuels investments and consumption
The major drivers of economic growth in the third quarter were a robust increase in investment and growing private consumption. Capital formation increased by 19.4% compared to last year, while private consumption increased by 6.7%. Government final consumption increased by 2.9%.
Read more: Balance of payments positive for 14 consecutive quarters: Q3 surplus largest on record
While exports remained virtually stagnant, declining by 0.1% at the same time as imports increased by 11.6% Iceland continues to run a large balance of payments surplus thanks to tourism. The balance of payments means foreign currency has been flooding the economy, pushing up the value of the Icelandic currency, the Króna. The strong Króna in turn makes imports cheaper, which in turn helps explain the strong growth in household consumption and investments: Consumption and capital goods are mostly imported.
The GDP of Iceland increased by 3.1% in real terms during the third quarter, compared to the same time the year before, new data from Statistics Iceland reveals. Seasonally adjusted GDP increased by 2.2% from the second quarter of this year. The economy has expanded by 4.3% during the first nine months of this year, compared to last year.
A strong Króna fuels investments and consumption
The major drivers of economic growth in the third quarter were a robust increase in investment and growing private consumption. Capital formation increased by 19.4% compared to last year, while private consumption increased by 6.7%. Government final consumption increased by 2.9%.
Read more: Balance of payments positive for 14 consecutive quarters: Q3 surplus largest on record
While exports remained virtually stagnant, declining by 0.1% at the same time as imports increased by 11.6% Iceland continues to run a large balance of payments surplus thanks to tourism. The balance of payments means foreign currency has been flooding the economy, pushing up the value of the Icelandic currency, the Króna. The strong Króna in turn makes imports cheaper, which in turn helps explain the strong growth in household consumption and investments: Consumption and capital goods are mostly imported.
