Country Report Iceland July 1998 Main report

Foreign trade & payments: Current-account deficit widens

The dramatic deterioration of the merchandise trade deficit was the main cause of the widening of the current-account deficit to Ikr16.1bn ($225m). Also of significance was the running of an unfavourable services balance for the second consecutive quarter, with imported services rising year on year in the first quarter of 1998 by 29.4% to almost Ikr14.6bn mainly as a result of a higher level of expenditure on travel and transportation. Although the rise in services exports failed to match the rise in imports during the same period, they still rose by an impressive 26.3% to Ikr13bn.

Current account (Ikr m unless otherwise indicated) 1997 1998 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year 1 Qtr Merchandise exports fob 33,102 32,237 31,087 34,787 131,213 28,896 Merchandise imports fob -27,974 -33,879 -33,879 -35,726 -130,959 -40,051 Trade balance 5,128 -1,642 -2,293 -939 254 -11,155 Exports of services 10,314 14,788 19,678 14,215 58,995 13,023 Imports of services -11,281 -14,160 -15,863 -15,453 -55,757 -14,598 Services balance -967 628 3,815 -1,238 2,238 -1,575 Income credit 1,759 1,718 2,212 2,440 8,129 2,264 Income debit -5,786 -4,410 -5,167 -4,545 -19,908 -5,467 Income balance -4,027 -2,692 -2,955 -2,105 -11,779 -3,203 Unrequited transfers -216 560 -133 -48 163 -172 Current-account balance -82 -3,146 -1,566 -4,330 -9,124 -16,105 $ m -1.2 -44.6 -21.9 -60.8 -128.9 -222.5 Source: Central Bank of Iceland, Economic Statistics Quarterly.

© 1998 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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