Iceland Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Iceland Country Risk Report
Product Price
$1,195.00

Core Views

  • Iceland's snap general election, to be held on October 29, is set to be extremely close, with a recent shift in opinion polls putting the incumbent Independence-Progressive coalition almost level with the combined support for the Pirate Party and Left-Green Movement. If the populist Pirate Party comes into government it would mark a major shift in Icelandic politics and policy making.

  • Iceland's economic rebound will remain in place in the coming quarters, driven predominantly by private consumption, which will be boosted by rising wages and house prices, and a booming tourism sector.

  • We expect the Central Bank of Iceland to cut interest rates in the coming quarters in an effort to stem recent appreciation of the krona, although the country's strong growth and wide interest rate differentials will drive additional currency strength.

Key Risks

  • The biggest risk to our forecast is policy trajectory, particularly in terms of how the current government chooses to remove distortive capital controls. Mishandling of the capital account liberalisation process has the potential to trigger a sell-off in the krona, or alternatively, a rush of inward capital trying to take advantage of high interest rates. This could have a damaging impact on external competitiveness. Similarly, taking a hard stance with regards to capital withdrawals by foreign creditors could damage long-term investor sentiment towards Iceland.

Macroeconomic Forecasts (Iceland 2014-2017)
Indicator 2014 2015 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 2.0 4.0 4.8 4.1
Nominal GDP, USDbn 17.2 16.7 15.9 17.9
Consumer price inflation, % y-o-y, eop 2.0 1.6 1.0 0.7
Exchange rate ISK/USD, eop 127.55 130.18 150.00 142.86
Budget balance, % of GDP -0.1 -0.5 -0.5 -0.4
Current account balance, % of GDP 4.1 4.8 4.5 3.2
Executive Summary
5
Core Views
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Rebound Remains On Track
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Monetary Policy
11
Rising Inflation To Warrant Monetary Tightening By End-2016
11
Monetary Policy Framework
12
Chapter 2: 10-Year Forecast
15
The Icelandic Economy To 2025
15
Settling Into More Moderate Long-Term Growth Trend
15
TABLE: LONG-TERM MACROECONOMIC FORECASTS
15
Chapter 3: Political Outlook
17
SWOT Analysis
17
BMI Political Risk Index
17
Domestic Politics
18
Pirate Party To Lead Shaky Next Government
18
TABLE: POLITICAL OVERVIEW
18
Long-Term Political Outlook
20
Few Major Threats On the Horizon
20
Chapter 4: BMI Global Macro Outlook
23
Global Macro Outlook
23
Summer Of Risk
23
TABLE: GLOBAL ASSUMPTIONS
23
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
24
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
25
TABLE: MACROECONOMIC DATA & FORECASTS
27

Assess your risk exposure in Iceland with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Iceland with confidence.

Your subscription service includes:

  • Delivery of the report in print and PDF
  • Online access for 12 months
  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
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  • The support of a dedicated Account Manager to answer any questions you might have about your subscription
  • Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report