Statistics Iceland has published its latest issue of Statistical Series, which presents the economic forecast for 2017-2023. It shows that the strong economic growth, which began in 2013, will continue throughout the rest of this year. Next year, however, it will begin to slow down.
During the years 2018-2023, Statistics Iceland believes the economy will slow down to a moderate level. GDP will have grown by 4.9% in 2017, while it is expected to grow by 3.1% in 2018 and around 2.6% per annum during 2019-2023.
Private consumption is expected to increase by 7.8% this year, while it is expected to slow down to 5.3% next year, 3.6% in 2019 and finally between 2.6-3.1% annually during 2020-2023. Investment is forecasted to increase by 8.8% in 2017, but be closer to GDP growth in the remaining years. Public consumption is expected to increase by 2.2% in 2017, 1.3% yearly 2018–2019 but around 1.8% per year during 2020–2023.
The tourism industry has driven the Icelandic economy for the past years, explaining the economic growth. This has allowed private consumption, disposable income, employment and real exchange rate to have recovered to at least the levels they were before the economic crash of 2008. Contrary to previous economic booms, however, there is a large current of account surplus rather than a large deficit.