Iceland economy grows at fastest pace since crash

Increases in domestic consumption, tourism and exports have seen the Icelandic economy expand in the year’s first quarter at its fastest pace since the 2008 banking crisis. According to statistics released on Friday June 8, annual economic growth for the first three months of 2012 was at 4.5 percent while GDP grew 2.4 percent, the highest rate since the first quarter of 2008. Annual growth for 2011 was also up 2.7 percent, while the fourth quarter was up 1.9 percent on the same period of 2010.

“It shows that the economy is growing rather rapidly, at least in an international comparison, at the moment,” Islandsbanki Chief Economist Ingolfur Bender said in a report by Reuters. “The increase is broad-based, driven by consumption, investment and exports,” he added.

Last year Iceland completed an IMF bailout programme following the collapse of the country’s banking sector, which came along with the bankruptcy of Lehman Brothers in 2008. Since then the economy has been helped by a combination of returning investment and an increase in tourists, lured by the relative weakness of the Icelandic currency.

According to Islandsbanki, the number of foreign tourists staying in Icelandic hotel rooms rose by 17 percent on the year to April. Investment was also up 9.3 percent on the first quarter, while consumption grew by 4.2 percent.