Country Report Iceland July 1998 Main report

Economy: Strong growth is consumer-led

Although no quarterly GDP figures are produced in Iceland, evidence suggests that the Icelandic economy is expanding rapidly in 1998, the sixth consecutive year of growth. Private consumption growth in particular remains strong following 6% growth last year which pushed imports of consumer goods up to 17.4% in the first four months of the year compared with the same period of the previous year. The registration of new cars, rising by almost 26% during the same period, is another early indicator of booming consumption. Compounding the inflationary dangers of a steep rise in real wages to the end of April, it seems that consumers have been financing higher levels of consumption partly by taking on a greater burden of debt, with loans to households up 24.1% at the end of March from the same time last year.

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