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Iceland: 2019 Article IV Consultation-Press Release and Staff Report

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  • International Monetary Fund

Abstract

This 2019 Article IV Consultation with Iceland discusses that after years of robust growth, economic activity has significantly weakened. Supply disruptions in tourism, the engine of recent growth, and the associated uncertainty have triggered a drop in domestic demand and an increase in unemployment. A swift policy response, with fiscal relaxation and monetary easing, has stabilized expectations and cushioned the effects. A moderate but fragile growth recovery is expected in 2020. Macroprudential measures are helping to preserve buffers for managing financial stability risks. Macroprudential policies are adequate, given still elevated household debt and real-estate prices and benign external financing conditions. Looking forward, the macroprudential toolkit could be expanded to contain potential risks in the loan portfolio over the medium term. Ongoing education reforms would boost human capital and productivity, greater transparency of large unlisted companies would preserve the business environment, and strategic policies in tourism and fisheries would protect the sustainability of traditional economic sectors.

Suggested Citation

  • International Monetary Fund, 2019. "Iceland: 2019 Article IV Consultation-Press Release and Staff Report," IMF Staff Country Reports 2019/375, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2019/375
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=48891
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    Citations

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    Cited by:

    1. Wael Hemrit, 2022. "Does insurance demand react to economic policy uncertainty and geopolitical risk? Evidence from Saudi Arabia," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(2), pages 460-492, April.
    2. Lundahl, Mats & Sjöholm, Fredrik, 2020. "Economic Challenges for East Timor," Working Papers 2020:14, Lund University, Department of Economics.
    3. Barseghyan, Gayane, 2019. "Sanctions and counter-sanctions : What did they do?," BOFIT Discussion Papers 24/2019, Bank of Finland, Institute for Economies in Transition.
    4. Abdulaziz I. Almulhim & Ismaila Rimi Abubakar, 2021. "Understanding Public Environmental Awareness and Attitudes toward Circular Economy Transition in Saudi Arabia," Sustainability, MDPI, vol. 13(18), pages 1-15, September.
    5. repec:zbw:bofitp:2019_024 is not listed on IDEAS
    6. Kireyev, Alexei & Leonidov, Andrei, 2021. "Twin trade shocks: Spillovers from US-China trade tensions," International Economics, Elsevier, vol. 167(C), pages 174-188.
    7. Joseph Mawejje & Nicholas M. Odhiambo, 2021. "Uganda's fiscal policy reforms: What have we learned?," Public Budgeting & Finance, Wiley Blackwell, vol. 41(2), pages 89-107, June.

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