Economist: “Crisis in Iceland Is Over” Skip to content

Economist: “Crisis in Iceland Is Over”

Icelandic professor in economics Gylfi Zoëga stated economic growth is higher in Iceland than in many other western countries and everywhere there are signs of an upswing. He declared the crisis to be over, although the living standard in Iceland has not reached the same level as in 2007.


From a demonstration after the banks collapsed in 2008. Photo by Geir Ólafsson.

Gylfi pointed out that since the banking collapse in October 2008, Iceland’s gross domestic product (GDP) has increased by 3.7 percent, which is a higher rate than the average among European Union member states, reports.

Gylfi stated that during daily bickering, most Icelanders have failed to notice the upswing of the national economy which began in mid-2010. Since then, the country has boasted economic growth. Last year it measured three percent, which is higher than in many other western countries.

“It is caused by increased investment, private consumption and export, that is, tourism and the fishing industry. All around we can see signs of the upswing which is gaining strength in Iceland,” Gylfi said.

“The employment level is improving, the purchasing power of salaries is improving,” he pointed out. “The purchasing power is similar as in 2005, the GPD comparable to 2006 on fixed pricing. So we are doing pretty well and better day by day.”

In addition, the debts of households and companies have decreased and the ownership of companies that make up a large part of the employment market has been sorted out. The economy is much healthier than it used to be, Gylfi stated.

“The living standard is not as good as in 2007 because then we were living off loans, meaning it is easy to maintain a good living standard short-term by taking high foreign loans. But now, the living standard that we have is that what the country can afford and at the same time foreign loans are being paid off,” Gylfi explained.

However, he warned that Iceland might be affected by blows in foreign fiscal markets because of the capital controls and the crisis in Europe will affect the value of Iceland’s export products and thereby the living standard of Icelanders.


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