Iceland: Staff Report for the 2002 Article IV Consultation

IMF Staff Country Reports, July 3, 2002

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The 2002 Article IV Consultation highlights that economic developments in Iceland since early 2001 have been characterized by progress in the correction of some of the imbalances.
As sentiment turned, the currency depreciated sharply and growth in economic activity decelerated from 5½ percent in 2000 to 3 percent in 2001—bringing it closer to its long-term sustainable pace.
The balance of demand switched swiftly from consumption and other domestic expenditure to net exports.
As a result, the current account deficit fell to about 4½ percent of GDP.

Growth in economic activity: 5½ percent in 2000; 3 percent in 2001.
Current account deficit: about 4½ percent of GDP after the demand shift.
Structural theme: correction of macroeconomic imbalances driven by currency depreciation and demand rebalancing.