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Eco­nom­ic fore­cast to 2027: The eco­nomy catches its breath

Hagspá Landsbankans
15 October 2024

Landsbankinn Economic Research forecasts a near status quo in the economy between years and a 0.1% contraction in GDP in 2024.

This is a considerable change from previous years, when annual economic growth has measured 5-9%, though accompanied by high and persistent inflation. This forecast anticipates a different and calmer tempo. There is more slack in the economy that allows for breathing space - inflation recedes considerably, interest rates decrease and the economy gets off to a nice and easy start with 2% annual growth in the coming years. 

These are among the highlights of the economic forecast of Landsbankinn Economic Research, looking forward to year-end 2027. Economic Research presents its forecast in Harpa, at 8:30-10:00 on Tuesday, 15 October. The event is also streamed live on the Bank’s website.

Una Jónsdóttir, Head of Landsbankinn Economic Research:

“The forecast is mostly fair despite the outlook for a slight contraction this year. The domestic economy is going through a timely and necessary cooling phase, an adjustment that may nonetheless be painful for many. The real interest rate remains high and may yet rise. This means that restraint may tighten, putting pressure on domestic households and companies. But the rate-cutting cycle has begun, and we think that a win in the battle against inflation is within sight. It could take time to pressure inflation down to target and we do not necessarily expect that to happen this side of the forecast horizon, despite a handsome reduction in inflation.”

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