Iceland economy forecast to expand by 2.7% in 2014

Iceland economy forecast to expand by 2.7% in 2014Iceland’s economy has been forecast to grow by 2.7 per cent this year, according to the most recent prediction by Statistics Iceland.

The data also revealed that the North Atlantic nation’s economy is forecast to expand by 3.3 per cent next year and from between 2.5 and 2.9 per cent per year between 2016 and 2018.

Growth in private consumption is likely to be 3.9 per cent this year and four per cent next year, according to the statistics, while the increase from 2016 to 2018 should be no less than three percent per annum.

Meanwhile, the household debt relief programme the government has introduced is expected to have a significant impact from the start of 2015 on household balance sheets, supporting the estimated rises in private consumption for the period.

Inflation during 2014 was expected to be at a low 2.2 per cent because of the appreciation in exchange rates, as well as “modest” wage agreements and low inflation among trading partners. One of the key factors behind inflation this year has been the cost of residential housing.

Looking ahead, inflation forecasts for 2015 and 2016 are 2.7 per cent and three per cent respectively.