Unemployment in Iceland will continue to rise, according to the Central Bank. Unemployment has never increased so quickly or been as high, according to the Bank’s quarterly monetary bulletin.
The CBI predicts a 2009 unemployment rate of 9.3 percent, increasing to 11 percent next year and a recovery to 9.1 percent in 2011.
The report also states that inflation in Iceland will fall to 2.5 percent this year; which is nearly at the Bank’s 2 percent long-term target. The Bank lowered its interest rate yesterday by 2.5 percent to 13 percent, the biggest ever single change since the rate was lowered by 5 percent last March, RUV.is reports.
The CBI predicts that households will place more emphasis on saving and debt reduction than previously, with personal consumption collapsing by 23.5 percent this year and a further 2.1 percent next year, before increasing 2.9 percent in 2011.
House prices continue to drop. Homes are now a quarter cheaper than they were at the peak in 2007, and the CBI predicts that by 2011, prices will have dropped by 46 percent. The Central Bank predicts that the recession in Iceland’s housing market will be longer and more severe than in other countries affected by the international financial crisis.
“(…) The Central Bank predicts that the recession in Iceland’s housing market will be longer and more severe than in other countries affected by the international financial crisis.”
Is this what the title says?
“Central Bank of Iceland sets out its vision of the future”
If yes, I prefer living without predictions and visions for the future…
What are CB “predictions” worth? if any….
What is this?
Science or just ******** press-release? Why not 23.53467 percent this year and 2.13994837 percent next year? Or 35% and 10%? Or whatever?
Since March it stays at 17,000+ level. It will rise for sure but not that much. This is the difference of Iceland from the rest of “world economy”. All “predictions” are based on other countries timelines. But because of Iceland’s size all processes here are happening several times faster – like in the testing lab. Low inertia ;-)
BTW – it will easier to gain speed again.
PS. Their report says that in “happy” Spain unemployment increased just by mere 2 times (in Iceland – more than 5 times). But! Iceland just reached the level of unemployment that Spain had before! So YoY is 1.5% to 8.5 for Iceland and 8% to 17% for Spain. Feel the difference (c).
That house price prediction is scary. Maybe foreign investors will exploit opportunities in 2011 – because a 46% drop in krona terms could equate to a 75% cheaper in euro terms…
True prediction “the only thing that is going to make a difference and fix the economy is reducing the indexed/over-inflated loans that people have”. It doesn’t make since to take on a loan you will never be able to pay-off. Either the new government does something about this or they will be gone like Hardees’s administration. Icelanders are like volcanos, mostly quiet until they erupt in a huge way!!!
As alexander says:
“What are CB “predictions” worth? if any….”
Now you dont agree with the “official” economic outlook, well, I dont agree with the outlook either but in a much sensitib-ve way than you, if they are saying this half truth is because they know the outlook is at lest 3 times worst, but as time goes and you see that all what you have been saying for the past couple of months is bull… and what people like me and gus and niels and peter and many others have been saying is actually more reallistic and according to how events have been developeing, and day by day we can see mor clearly wher is Iceland economy actually heading, now you try to undermine the CB outlook, you are right saying that the aoutlook is incorrect but not because they are maximizeing the aoutlok but by the contrary they are minimizeing it, but they are starting som how letting people know whats actually going to happen. But like I said to Fisy its ok by me if you want to belive in a beutifull pink world full of flowers and that what happen in Iceland was nothing just a bump on the road but it wont have any consequences, it was just a bad dream, everything is ok. Go ahead.
“The International Monetary Fund predicts Iceland gross domestic product, or GDP, will contract by 10% next year.”
This is still larger than the GDP of countries like Spain, Italy, Portugal, Greece. And in Iceland you call this … crises? :)