Weekly bulletin 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.

4 March 2024

The week ahead

On Tuesday, the Central Bank of Iceland (CBI) releases balance of payment and net national debt figures.
On Thursday, Hampiðjan, Kaldalón and Síldarvinnslan publish financial statements. This is also an interest rate decision day at the European Central Bank (ECB).
On Friday, the Directorate of Labour publishes registered unemployment in February. We will also see unemployment figures from the US.

Image of the week

Economic activity slowed down considerably as 2023 progressed following almost two years of robust growth in the post-pandemic era. This pattern extends to all aspects of the economy - overall growth, private consumption, capital formation, export and import. The year began with a bang only to slow down with each quarter.

Highlights of the previous week

Economic growth was 4.1% in 2023, according to preliminary figures from Statistics Iceland. This was higher than expected, caused not least by changes to the institution’s updates to data for the first and third quarters. In the fourth quarter, both private consumption and capital formation contracted between years. Export was unchanged between quarters while import contracted by 6%. Economic growth measured 0.6% in the quarter, mainly due to the considerable reduction in import, which fits the contraction in private consumption and capital formation, with lower import leading to an increase in GDP.
The CPI less housing rose by 1.33% between months, bringing the 12-month change up to 6.6% from 6.7%. Inflation was rather higher in February than expected, due mostly to January sales of garments and footwear ending sooner than usual, tariff increases for waste disposal, sewerage and cold water pressuring the CPI considerably more upward than expected, and the shopping basket price increasing more than anticipated. We still expect inflation to recede in the coming months but to only 5.5% by May instead of 4.9% as in our previous forecast.
Statistics Iceland also published preliminary catch value figures for 2023, registered overnight stays in January and the travel sector’s share in GDP in 2023.
Inflation in the Eurozone fell slightly between months in February, from 2.8% to 2.6%.
Four companies published results last week: Iceland Seafood, Nóva klúbburinn, Sýn and VÍS (investors' presentation). Alvotech accepted an offer to sell shares, Arion Bank hosted investor days, Reginn entered into reconciliation discussions with the Competition Authority regarding the purchase of all share capital in Eik and PLAY registered subscriptions in the amount of ISK 4 billion.
In the bond market, Iceland Seafood and Kaldalón auctioned bills and Landsbankinn auctioned subordinated bonds.
Fitch confirmed Iceland’s sovereign rating of A with stable outlook.

Statistics and market data

Weekly bulletin 4 March 2024 (PDF in Icelandic)

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