Iceland GDP Increases in First Quarter Skip to content

Iceland GDP Increases in First Quarter

On June 8 Statistics Iceland announced that in real terms, seasonally adjusted GDP in the 1st quarter of 2011 increased by 2.0% from the previous quarter. This is only the second quarter since 2008 of growth in GDP. The increase seems to be entirely driven by increase in capelin fishing.

gdp_change_2008-2011
GDP change by quarter. 2008-2011. Source: Statistics Iceland

Preliminary figures indicate that household final consumption decreased by 1.6% and gross fixed capital formation decreased by 6.8%. On the other hand, government final consumption increased slightly by 0.1%. Exports decreased by 8.2% and imports by 4.1% in the 1st quarter of 2011 as compared with the 4th quarter 2010. Hence, most of the traditional components of the GDP were rather weak. The entire increase is owing to a considerable increase in inventories, total domestic final expenditure increased by 5.1%.

According to Vísbending, an economic weekly newsletter, published by the same publisher as Iceland Review, capital investment has been decreasing for five years in a row and is now at a dangerously low level. Private consumption has continued to decrease. A salary increase of 4.25% is expected to increase inflationary pressure. The Icelandic króna has getting weaker from January 2011. The Euro was 154 ISK on January 1 but is now 166 ISK. A government bill in Althingi, Iceland’s Parliament, on extending currency restrictions to four years is now pending.

Inflation is on the rise and is now 3.4%. Unemployment is 7.8%. The balance of trade was favorable for the first four months of 2011 by about 20%. Vísbending says that economy has stabilized but signs of real recovery are few.

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