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Iceland Mag

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Icelandic Economy boomed in first six months of 2015: GDP grew by 5.2%

By Staff

  • A booming economy Icelandic GDP grew by 5.2% year over year during the first six months of 2015. Comparable figures have not been seen since 2007. Photo/Valgarð Gíslason.

The Icelandic Economy continues to grow according to recent figures released by Statistics Iceland. Icelandic GDP grew by 5.2% in real terms in the first six months of 2016, compared to the same period in 2014. The local newspaper Morgunblaðið comments that figures like these have not been seen in Iceland since before the financial crash of 2008.

Investment at an all time high
A key driver of economic growth in the first six months of 2016 was investment. Compared to the first six months of 2014 private consumption in the first six months of 2015 grew by 4.4% and public consumption by 1.0%, while capital formation increased by 21.2%. The balance of trade in goods worsened. Exports grew by 9% while imports grew by 13.6%. 

Economy grew by 1.8% in 2014
According to the newly released revised national accounts for 2014 economic growth was 1.8% in real terms in 2014, compared to 3.9% in 2013 and 1.2% in 2012. Again, a key driver of growth was strong investment. Capital formation increased by 15.4% in 2014, which is the largest increase since 2006. At the same time the balance of trade continued to worsen. But despite a decrease in the balance of trade surplus in 2014, Statistics Iceland points out the current account surplus is still large, at 4.2% of GDP, compared to the 6.6% of GDP in 2013. 

Significantly higher growth than the OECD average
The OECD projects that economic growth in Iceland will be 4.3% this year, and 2.7% in 2016. Both figures are significantly above OECD averages. This year‘s economic growth is also on track to be significantly higher than the long term average for Iceland. According to the Icelandic Central Bank the Icelandic economy grew on average by 3.8% annually, in real terms, between 1946 and 2010.

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