Iceland: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iceland

IMF Staff Country Reports, June 23, 2023

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Iceland: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iceland

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Bibliographic details

• Published: June 23, 2023
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400246784.002

Macroeconomic overview and outlook

• The Icelandic economy "has shown remarkable resilience and rebounded quickly from the multiple shocks in recent years."
• The economy is "currently operating well above potential."
• Growth projections:
  • "3.2 percent in 2023"
  • "1.9 percent in 2024"
• The medium-term outlook is described as "favorable."

Inflation, prices, and external imbalances

• Inflation is "significantly above target."
• Contributing factors to inflation and imbalances:
  • "high import and house prices"
  • Operating above potential
• The above has "contributed to external imbalances."

Near-term dynamics and domestic demand

• Near-term moderation drivers:
  • "policy tightening"
  • "headwinds from the deteriorating terms of trade"
• Expected effects:
  • These factors "will dampen domestic demand and reduce imbalances."
• Private consumption:
  • "Private consumption growth is likely to remain robust on a further drawdown of household savings and strong employment growth supported by continued immigration."

Financial sector risks

• Potential funding pressure:
  • "Banks could face funding pressures if pension funds were to re-direct their investments from domestic to foreign markets."

Publication metadata and identifiers

• Pages: 90
• Volume: 2023
• Issue: 217
• Series: Country Report No. 2023/217
• DOI: https://doi.org/10.5089/9798400246784.002
• Stock No: 1ISLEA2023001
• ISBN: 9798400246784
• ISSN: 1934-7685

International Monetary Fund. Iceland: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iceland

Content in this bundle

• 1. Key Macroeconomic Developments
  • 1. Key Macroeconomic Developments (Markdown version)
  • 1. Key Macroeconomic Developments (PDF)