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Mac­roe­co­nomic fore­cast 2022-2024

Íslandsbanki Research issues macroeconomic forecast for 2022-2024

After contracting by 7.1% in 2020, the Icelandic economy regained its footing in 2021 and is positioned for strong GDP growth in the next three years.

For 2022, the forecast is for 5.0% GDP growth but considerably slower growth after that. The growth will largely be fueled by export with rising tourist numbers as well as bountiful capelin season, increased fish farming and export of intellectual property among key drivers of growth.

Inflation will remain quite considerable, mainly due to rising housing prices, international inflation and local wages. This will result in tighter monetary policy with the policy rate predicted to be at 5-6% by the year-end but decreasing in the latter half of the forecast time.

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Main find­ings

  • GDP: 5.0% GDP growth in 2022, 2.7% in 2023 and 2.6% in 2024

  • External trade: Current account surplus estimated at 0.1% of GDP in 2022 and close to 2% in 2023 and 2024.

  • Inflation: Inflation to average 7.6% in 2022, 5.9% in 2023 and 3.9% in 2024.

  • Labour market: Unemployment to average 4.4% in 2022, 3.7% in 2023 and 3.6% in 2024.

  • Interest rates: Policy rate projected at 5% by end-2022. Close to 4.5% at the end of the 2024.

  • The ISK: ISK estimated to appreciate by 5% from the end of April until year-end 2024.

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Jón Bjarki Bentsson

Chief economist


Bergþóra Baldursdóttir