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
Disclaimer
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15 Oct. 2024
Landsbankinn Economic Research forecasts a status quo in the economy between years and a 0.1% contraction in GDP. Setbacks affected the export sector in the first half of the year, with capelin catch failure and slower growth in the travel sector causing a contraction. This has been compounded by the cooling impact of high interest rates on demand, which nevertheless remains strong.
14 Oct. 2024
Tomorrow morning, Landsbankinn Economic Research presents a new economic forecast to the year 2027 at a morning meeting in Harpa. This week, the Housing and Construction Authority (HMS) publishes the housing price index, the rental price index and its monthly housing market report. On Wednesday, the Central Bank of Iceland (CBI) releases the minutes of the Monetary Policy Committee’s last meeting. Last week’s highlight was that traveller numbers to Iceland are slightly up between years in September and there is a small uptick in unemployment.
7 Oct. 2024
The Monetary Policy Committee (MPC) of the Central Bank of Iceland (CBI) lowered the policy rate last week, for the first time in four years. The CBI’s key interest rate is now 9% after having stood unchanged at 9.25% for over a year. Inflation in the eurozone remains on a downward trajectory, measuring 1.8% in September, below the 2% inflation target. Inflation figures for the US will be published this week.
30 Sept. 2024
Inflation was slightly lower than expected in September, down from 6.0% to 5.4%. We nevertheless expect that the Monetary Policy Committee (MPC) will wish to proceed with caution when it meets early this week and that it will keep the policy rate unchanged on Wednesday.
23 Sept. 2024
This week, the Central Bank of Iceland (CBI) releases a statement from the Financial Stability Committee and a report on financial stability. Statistics Iceland publishes inflation figures for September on Friday. Last week, the Housing and Construction Authority (HMS) published the housing price index, which rose sharply between months, and the rental price index, which was down between months. Data on payment card turnover, published by the CBI last week, indicates that there is still considerable domestic demand for goods and services.
16 Sept. 2024
This week will see the publication of the housing price index, the rental price index and payment card turnover figures for August. Last week we learned that tourist arrivals in August of this year were similar to the same month in 2023. Unemployment increased slightly between months in August. The fiscal budget for 2025 was presented.
9 Sept. 2024
This week’s highlights are the publication of August tourist figures and registered unemployment, both set for release tomorrow. Last week, the minutes of the last rate decision meeting of the Monetary Policy Committee (MPC) were published. The MPC was unanimous in its decision to keep the policy rate unchanged, unlike the previous three meetings, at which one Committee member voted to lower rates by 0.25 percentage points.
2 Sept. 2024
Inflation decreased unexpectedly between months in August. The economy contracted slightly between months in the second quarter. At the same time, it has become clear that GDP growth was higher in 2023 than previously thought, and that the contraction was less pronounced in the first quarter. This week, the Central Bank of Iceland (CBI) publishes the balance of payment and the minutes of the last meeting of the Monetary Policy Committee (MPC).
26 August 2024
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