Iceland: 2022 Article IV Consultation - Press Release; and Staff Report
IMF Staff Country Reports, June 27, 2022
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- Iceland: 2022 Article IV Consultation - Press Release; and Staff Report
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Bibliographic details
- Published: June 27, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400212222.002
Macro outlook and recent performance
- Iceland "weathered recent shocks to the economy relatively well."
- Real gross domestic product and employment "recovered strongly" following the pandemic.
- Output growth was "4.3 percent in 2021," supported by robust domestic demand and favorable terms of trade, despite slower recovery in tourism.
- Growth is expected to "remain moderate in 2022 and the medium term."
Risks and policy priorities
- Careful policy coordination is required to:
- "entrench the recovery"
- "stem risks"
- "rebuild buffers to pre-pandemic levels"
- Policies should mitigate:
- "the flaring-up in inflation"
- "external imbalances"
- "house prices"
Structural reforms and diversification
- Structural reforms should "facilitate economic diversification and make the economy more resilient to shocks."
- Diversification efforts should focus on:
- "easing regulatory burdens on start-ups"
- "spurring innovation by leveraging Iceland’s human capital and advanced digital infrastructure"
- The new collective wage agreement can foster diversification and resilience through "better alignment of wage and productivity growth."
Institutional and policy strengths
- "Well-designed policy measures and a solid health system eased the impact of the pandemic," supporting the recovery.
Content in this bundle
- 1. Key Macroeconomic Developments