Iceland: Fourth Post-Program Monitoring Discussions

International Monetary Fund

No 2014/194, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper discusses Iceland’s Fourth Post-Program Monitoring Discussions. Iceland’s economy has grown strongly on the back of booming tourism. Real GDP grew 3.3 percent in 2013, despite a drop in investment spending. Net exports were the primary driver. High frequency indicators suggest strong net exports—including steady growth in off-season tourism—have continued in Q1 2014, along with rising private consumption. Inflation has fallen below the Central Bank of Iceland’s 2.5 percent target but long-term inflation expectations remain noticeably above this level. The government’s medium-term fiscal objectives deserve support, but further effort is needed to achieve them.

Keywords: ISCR; CR; foreign currency purchase; staff appraisal; pace of inventory accumulation; MPC; central bank; inflation expectation; BoP prospect; Capital controls; Debt relief; Global (search for similar items in EconPapers)
Pages: 63
Date: 2014-07-10
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