From Iceland — Landsbankinn Says Economy is Back on Track

Landsbankinn Says Economy is Back on Track

Published June 1, 2022

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An 8.6% growth in GDP compared to this time last year and four consecutive quarters of positive economic growth, confirms the economy is back on track, reports RÚV.

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Landsbankinn has recorded strong growth in private consumption, investment, and exports, the key components of GDP. This growth is expected to continue through the rest of the year, with a recent forecast predicting 5.1% growth.

Economists are pleased with the news, but say it is not unexpected.

“It’s actually just a little bit of a continuation of what’s been happening,” says economist Gústaf Steingrímsson. “It’s actually a little bit like this: the composition of the economic growth right now in the first quarter is the same as it was in the last three quarters of the year, or last year, that is to say.”

Exports grew 28.3% compared to the same quarter last year. This is the second fastest growth in recent history. The fast growth can be attributed to an increase in foreign tourists.

“We are projecting that tourism will be what it has been over the last few years, such a key driver of growth, and that its growth this year will support very strong growth,” says Gústaf.

It is expected that increased capelin fishing will positively impact economic growth. Projections are estimating that there will be a 1.5% growth in the second and third quarters.

Private consumption grew 8.8% from the same quarter last year. Household consumption dropped during the height of the pandemic, but purchasing power remained strong. Therefore, private consumption should continue to increase as Iceland rebounds from the pandemic.

Economics is scary and hard to understand, so the story in layman’s terms: due to increased tourism, fishing, and purchasing of household and individual goods, the Icelandic economy has continued to grow. This growth bodes well for continued and future growth.

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