Iceland Mag

10 Reykjavik

Iceland Mag


Economy continues to grow: Investment and residential construction major drivers

By Staff

  • Construction Investment in residential construction has increased 38% in real terms compared to Q1 2017. Photo/Fréttablaðið

The Icelandic economy continued to grow robustly during the first quarter of 2018. According to the latest quarterly national accounts from Statistics Iceland (pdf) real GDP, (non-seasonally adjusted) grew by 5.4% during the first three months of the year.

The major drivers of economic growth were consumer consumption and investment, especially in residential housing. Total domestic expenditure increased by 6.8%. Household final consumption increased by 5.9%, government final consumption by 2.9% and gross fixed capital formation by 11.6%. At the same time exports grew by 11.1% and imports by 14.9%.

Investment in residential housing saw a dramatic increase: a 38% increase compared to the first quarter of 2017. Reykjavík is currently experiencing a severe housing shortage which has caused dramatic increases in rental and housing prices, pricing many low-income and first time homebuyers out of the market. 

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