Iceland Mag

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Iceland Mag

Economy

Icelandic GDP grew more in 2016 than initially believed: Growth was 7.4%

By Staff

  • Construction workers at Keflavík The Icelandic economy grew by 7.4% in 2016. Photo/Vilhelm.

According to revised national accounts for 2016 the GDP of Iceland grew 0.2 percentage points more last year than initially believed. The GDP grew by 7.4%, rather than the 7.2% initially believed. A major driver of economic growth was a 8.9% increase in gross domestic final expenditure. 

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

Household final consumption increased last year by 7.1% and government final consumption by just 1.9%. Gross fixed capital formation increased by 22.8%, which is the largest increase in Gross fixed capital formation since 2006. Capital formation consumed 21.3% of GDP in 2016, which is close to the historical average. Capital formation was primarily supported by a considerable increase of 26.4% in the private business sector, as well as in residential construction, which saw a 29.4% increase in capital formation in 2016.

The primary drag on growth in 2016 was the negative balance of trade in goods. Ex­ports grew in 2016 by 10.9% while imports grew by 14.5%. Despite this Iceland enjoyed a strong surplus in services. Service exports amounted to 26.8% of GDP and outweighed the exports of goods for the first time in the history of Icelandic National Accounts dating back to 1945. This resulted in a 155.4 billion ISK surplus in the balance of trade in goods and services in 2016. 

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