The Icelandic Economic Situation

Click here for the full report (pdf)
Click here for slides accompanying the report (pptx)

The Icelandic economy has gone through substantial changes in the last four years due to the collapse of its financial sector in October 2008. Some misconceptions developed concerning the chain of events and the status of the Icelandic economy, mostly because of a lack of external information flow. This Status Report, published in April 2012, is inteded to give an insight into the events and the current economic, business and political landscape in Iceland.

Despite substantial difficulties general economic activity is well functional and many Icelandic businesses remain strong. It must be noted that the economic turmoil in Iceland, which is gradually diminishing, is a part of a complex global financial crisis and is by no means an isolated event. However, Iceland was hit particularly hard by this financial storm due to the large size of the banking sector in comparison to the overall economy. Like governments of other countries, the Icelandic government both past and present has taken measures and is working towards overcoming the obstacles.

The Status Report is split into three main parts, part A, B and C. Part A, consists of the first 4 chapters and focuses on the general historical background leading up to the collapse and immediate consequences. Part B, chapter 5 to 10 focuses on the current economic landscape in Iceland and prospects. Part C, from chapter 11 through 22, focuses in more detail on more recent economic developments and policy actions. In addition there are 11 annexes which some aspects of the crisis are listed in more detail.

From the collapse of the financial sector the Iceland Chamber of Commerce has published this Status Report. It is sent to over 2.000 recepients in businesess, international institutions and administrations all over the world. The report is thought of as a collection of facts, data and references to websites rather than a deep analysis of the economic climate in Iceland. In the report there are hundreds of links which form its foundation. Major revisions were made in the 13th and 14th editions, many graphs, charts and pictures were added. Additionally the Chamber regularly publishes slides to accompany the status report, see here.

In this 15th edition new information can be found on the following topics:

Currency restrictions: Further tightening of the restrictions and information on the Investment Program
IMF Program: The final review and new economic program
Government: Changes in administrations and new ministries
Icesave: The ESA process now before the EFTA Court
Debt reconstruction: The „Right Track“ and the „110% way“
Capital markets: Seven companies considering IPOs
Pension funds: New report on their investment strategy before the collapse
Savings Banks Restructuring: Merger of Íslandsbanki and BYR
Old banks: Resolution Committees disbanded
Fiscal Budget: Positive over-all balance in 2014-2015
Corporate Governance: New guidelines issued
The Enterprise Investment Fund: Current investments
McKinsey & Company: Report on the Icelandic Economy in process
Foreign Currency Loans: New Supreme Court ruling and corporate loans