18 March 2024
The week ahead
- On Tuesday, the Housing and Construction Authority (HMS) releases the housing price index for the capital area.
- Wednesday is a policy rate decision day at the Central Bank of Iceland and we forecast unchanged rates. Alvotech publishes results after market closing in the US, the US Federal Reserve announces its interest rate decision and the UK Statistics Authority releases inflation figures.
- On Thursday, Statistics Iceland publishes population figures for the beginning of 2024 and a revised timeline going back to 2011 based on an updated methodology. The Bank of England announces its policy rate decision.
Image of the week
In 2023, each international tourist purchased on average 3.5 overnight stays at registered accommodation and charged ISK 145,000 to their payment card while in Iceland, or ISK 41,000 per day. Overnight stays are down between years while turnover of international payment cards per overnight stay is up. This indicates that while the average duration of visits has become shorter, travellers are spending more each day. Increased spending per overnight stay was not sufficient to offset fewer overnight stays and total turnover per tourist contracted between years in 2023. Tourist arrivals in Iceland are nevertheless up between years such that the travel sector grew despite lower consumption per tourist. This year to date, card turnover per tourist has continued to contract between years.
Highlights of the previous week
- International tourist departures numbered 156,000 in February, a considerably higher figure than in February 2023, when the number was 137,000. Only in the record year 2018 have there been more tourist departures in February. The seismic and volcanic activity on the Reykjanes peninsula does not appear to have affected the tourist stream.
- Price measurements for the March Consumer Price Index were carried out in the week. We expect the CPI to increase by 0.57% between months in March and inflation to remain steady at 6.6%. The main components pressuring the CPI upwards in our forecast are imputed rent, international air fares, clothing and shoes and the food basket. We still assume that inflation will recede slowly over the coming months, down to 5.4% in June.
- The VR Trade Union and the Commercial Federation of Iceland (LÍV) signed a collective bargaining agreement with the Confederation of Icelandic Employers (SA).
- The CBI published the statement of the Financial Stability Committee and its Financial Review.
- The public sector revenue outcome was negative by ISK 87 billion in 2023.
- In the bond market, OR issued green bonds and Landsbankinn finalised the issuance of covered bonds. The Treasury issued a green EUR-denominated bond.
Statistics and market data
Disclaimer
This review and/or summary is marketing material intended for information purposes and does not constitute financial advice or an independent financial analysis. The legal provisions that apply to financial advice and financial analysis do not apply to this content, including the ban on transactions prior to publication. The review is based on publicly available information from parties that Landsbankinn deems reliable yet the Bank cannot independently guarantee the accuracy of the information. Landsbankinn is not liable for any loss that may result from use of the information contained herein.Information about the past performance of financial instruments or indices show nominal returns, unless otherwise mentioned. If results are based on foreign currencies, returns may increase or decrease as a result of currency fluctuations. Past returns are not necessarily an indication of future returns. Detailed information about the historic performance of financial instruments and indices is available on Landsbankinn’s website, including on returns for the past 5 years.
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8 April 2024
Around 14% more tourists travelled through Keflavík International Airport in February of this year than the same month of 2023. The duration of stays is shorter than before, with registered overnight stays declining by 2.7% between years in February.
11 March 2024
The three large export sectors, tourism (ISK 600 bn), aluminium and aluminium products (ISK 320 bn) and seafood products (ISK 350 bn), were behind 70% of total export value in 2023. Other export created value in the amount of ISK 580 bn, more than either seafood products or aluminium and aluminium products.
4 March 2024
After almost two years of very robust economic growth in the post-pandemic era, the economy slowed down considerably as 2023 progressed.
26 Feb. 2024
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19 Feb. 2024
The composition of the labour market has changed somewhat since 1991. Managers, specialists, professionally qualified staff and service and retail sector employees have grown in number while office workers, farmers and fishermen have grown fewer.
5 Feb. 2024
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Last year, wages increased by 10% on average between years. Despite much higher wages, their purchasing power, i.e. the goods and services that can be purchased for wages, only grew by 1%.
22 Jan. 2024
Total government expenditure on domestic research and development (R&D) was 2.7% of GDP in 2022. This is slightly higher than the EU average yet lower than in countries like Denmark, Finland, Sweden and Germany.