## Iceland: 2021 Article IV Consultation-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Iceland

_IMF Staff Country Reports, June 8, 2021_

## Source details

**Canonical URL:** [Iceland: 2021 Article IV Consultation-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Iceland](https://www.imf.org/en/publications/cr/issues/2021/06/08/iceland-2021-article-iv-consultation-press-release-staff-report-staff-statement-and-50201)

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## Bibliographic details
- Published: June 8, 2021
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513573144.002

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### Economic impact and near-term outlook
- Real GDP plummeted by 6.6 percent in 2020 due to a sharp tourism contraction and containment measures.
- A modest recovery is expected to take hold in 2021.
- Recovery prospects in the tourism sector hinge on control of the epidemic and progress in global and domestic vaccine distribution, creating a challenging outlook with the risk of deep medium-term scarring.

### Fiscal stance and policy space
- Policy buffers accumulated over the last decade provided space for a large fiscal support and accommodated substantial automatic stabilizers.
- Fiscal policy should continue to support the economy for now.
- Additional stimulus is planned in 2021 to address still large slack in the economy, mitigate scarring, and provide confidence in the event of downside risks.
- Medium-term policies should ensure that public debt is firmly on a downward path, while limiting the drag on growth.

### Key themes and sectoral considerations
- Tourism: central to the recovery; outcomes depend on epidemic control and vaccine rollout.
- Health: pandemic containment and vaccination progress are primary determinants of economic trajectories.
- Monetary and financial sectors: implications for currency markets, financial markets, and monetary policy effort are highlighted by the economic shock.
- Statistics and fiscal data: the report includes economic and financial statistics and government finance statistics to inform policy.

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_Source: https://www.imf.org/en/publications/cr/issues/2021/06/08/iceland-2021-article-iv-consultation-press-release-staff-report-staff-statement-and-50201_