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Iceland Mag

Economy

Icelandic economy continues to boom: GDP expected to grow by by 6% in 2017

By Staff

  • More Króna The Icelandic Economy is expected to continue to boom in 2017. Photo/Valgarður Gíslason

The Icelandic economy, which grew by 7.2% in 2016, is expected to continue to boom. Statistics Iceland projects GDP will grow by 6% in 2017. This is a significant upward revision from the last projection, issued in February. According to the February 17 Economic Forecast GDP was expected to grow by "only" 4.3%. The IMF is forecasting that global growth in 2017 will be 3.4%.

Read more: Report: Icelandic economic growth tops all but one OECD country in 2016: GDP grew 7.2%

Statistics Iceland expects the strong growth to be fueled by a boom in tourism as well as strong private consumption and investment. Private consumption is expected to grow by 6.9% and investment by 9.8%. Private consumption has increased somewhat faster than previous forecasts had anticipated. Private consumption is expected to remain strong for the next couple of years, thanks in part to the appreciation of the Icelandic króna.

The pace of growth will slacken somewhat in 2018 when GDP is expected to grow by 3.3%, and in 2019 when GDP is expected to grow by 2.8%. Private consumption growth is expected to be modest during 2019–2022. Large scale industrial investment will contract during 2018–2020, while regular business investment growth will decline but residential investment growth will continue to be robust.

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