Macroeconomic forecast 2021-2023

​Healthy growth will begin in 2021 if tourist arrivals develop as expected


We forecast GDP growth at 3.2% in 2021, driven mainly by the recovery of exports and moderate growth in consumption and investment.

In 2022, however, the outlook is for 5% growth, with exports and domestic demand set to regain an even more secure footing during the year.

In 2023, the final year of the forecast horizon,  we project growth at just under 3.6%, driven by exports, investment, and consumption in roughly equal measure. If the forecast materialises, real GDP will finally rise above the pre-pandemic level in the last year of the horizon.

Main findings

  • GDP growth - Forecast 3.2% growth in 2021, 5.0% in 2022 and 3.6% in 2023

  • Foreign trade - Expect the current account surplus to measure 1.3% in 2021 and around 4% per year in 2022-2023

  • Inflation - Inflation to average 3.0% in 2021, 2,2% 2022 and 2,3% 2023.

  • Labour market- 9.4% average unemployment this year. 4.6% 2022 og 3.3% 2023.

  • Interest rates - Policy rate to remain at 0.75% this year, average 1.5% 2022 and 2.6% 2023.

  • ISK - Appreciation of 1.6% forecast for 2021, 3.3% 2022 and 3.2% 2023.

Authors


Jón Bjarki Bentsson


Chief economist

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Tryggvi Snær Guðmundsson


Economist

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