5 February 2024
The week ahead
- Wednesday is an interest rate decision date at the Central Bank of Iceland (CBI) and sees the publication of Peningamál. We forecast unchanged rates. Arion Bank, Festi and Marel publish results.
- On Thursday, Íslandsbanki, Sjóvá, SKEL fjárfestingarfélag and Play publish results.
- On Friday, the Icelandic Tourist Board releases departures from Leifsstöð International Airport and the Directorate of Labour publishes registered unemployment.
Image of the week
Inflation has decreased in recent months and, in addition, fewer components have increased by over 10% in the past 12 months. Over 30% of components had increased by over 10% in the past 12 months in November 2023 and only 18% now in January.
Highlights of the previous week
- The Consumer Price Index fell by 0.16% between months in January, bringing 12M inflation down from 7.7% to 6.7% - it peaked at 10.2% in July of 2023. Air fares from Iceland decreased unexpectedly between months and new car prices increased much less than expected while other components changed more or less in line with expectations. We expect inflation to continue to decrease in the next months, to 6.1% in February, 6.3% in March and 5.1% in April. Dwindling inflation in the next three months is mainly a result of the significant increase that occurred between months in February through to April 2023; months that disappear from 12M inflation figures in coming months.
- The CBI published the results of its market expectations survey carried out 22-24 January before Statistics Iceland released inflation figures for January. There was no change to market expectations for inflation in the first half of 2024 as compared with the November survey, with the median response unchanged at 6.9% for the first quarter and 6.0% for the second quarter. Instead of 5.0% inflation in the fourth quarter of 2024, the market now expects 5.5% inflation. Many more respondents than in November now consider the monetary policy stance to tight and most expect the first policy rate cut in the second quarter.
- The Icelandic Tourist Board published its summary for 2023.
- Landsbankinn and Icelandair (IR presentation) published annual financial statements for 2023, Eik published internal accounts and Alvotech announced positive results of pharmacokinetic testing of AVT03.
- ÍL-sjóður offered switches.
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.Securities transactions involve risk and readers are encouraged to familiarise themselves with the Risk Description for Trading in Financial Instruments and Landsbankinn’s Conflict of Interest Policy on Landsbankinn’s website.Landsbankinn is licensed to operate as a commercial bank in accordance with Act No. 161/2002, on Financial Undertakings, and is subject to supervision by the Financial Supervisory Authority of the Central Bank of Iceland (www.fme.is).You may also be interested in
15 April 2024
Inflation will recede somewhat in April, from 6.8% to 6.1%, only to remain fairly stable in the coming months and stand at 5.9% in July, according to our newest inflation forecast. Despite the dent interest rate increases have made in demand, the economy is still going fairly strong and there is tension in the labour market. Inflation expectations remain well above target.
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.
18 March 2024
Figures for 2023 indicate that international tourists had fewer overnight stays in Iceland on average as compared to 2022 yet spent more per day than previously.
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
There was a continuous surplus on foreign trade in the years 2010 to 2019. This turned to a deficit in 2020 and 2021 during the pandemic. Foreign trade has been more or less balanced since.
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.
29 Jan. 2024
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.
15 Jan. 2024
Just over 2.2 million tourists departed from Leifsstöð International Airport in 2023, in line with our October forecast. In that same forecast, we anticipate 2.3 million tourists in 2024. The year 2023 is the second largest tourist year from the beginning, only topped by 2018, when 2.3 million travellers visited Iceland. This past year only just exceeded 2017, which was previously the second largest tourist year.