OECD: Crisis Hits Iceland Harder than Other States Skip to content

OECD: Crisis Hits Iceland Harder than Other States

By Iceland Review

According to an economic forecast by the Organisation for Economic Co-operation and Development (OECD), the global crisis is more severe in Iceland than in other OECD countries. Recession measures seven percent in Iceland this year, compared to the 3.5 percent average.

From Reykjavík’s financial district. Copyright: Icelandic Photo Agency.

However, the picture changes if a longer period is taken into account, in which case Iceland is in a better situation than most other OECD countries, ruv.is reports.

A newsletter from Íslandsbanki’s explains that due to the small size of the Icelandic economy, fluctuations are more common. Good economic periods even out the average.

The OECD assumes in its economic forecast that recession will continue in Iceland next year but economic growth of 2.5 percent is predicted for 2011.

Signs of recovery will start to appear next year, lower unemployment rates and lower inflation. Export will increase and import will continue to drop, which will result in a positive trade deficit, the forecast states.

According to the OECD, the recovery is dependent on the restoration of the financial system and new projects in relation to energy-demanding industries.

Click here to read about one such project, the planned aluminum smelter in Helguvík.

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