Economic growth will be much higher among OECD countries than in Iceland this year, according to the Ministry of Finance. There is a rapid turnaround in the state treasury’s performance this year, and it is expected that the performance as a percentage of gross domestic product will be about 2 percentage points better than previously assumed, amounting to about ISK 60 billion.
The recovery has been driven by a large number of tourists and the growth of private consumption. This is stated in the additional budget bill for the year 2022 that has been submitted to Alpingi.
It is stated in an announcement on the ministry’s website that the bill contains a reassessment of the profit prospects for 2022 compared to the budget plan. It is now assumed that the deficit of the treasury will be 3.4% of GDP this year instead of 5.2% of GDP according to the budget plan and 7% of GDP in 2021.
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“The rapid turnaround that is currently occurring in the state treasury’s performance follows a large deficit in 2020 and 2021, which resulted from the coronavirus pandemic. The impact of the epidemic has continued to affect the expenditure side of the treasury this year, but not to the same extent as last year. two years. The income side of the treasury has recovered bravely after having shrunk a lot during the epidemic,” the announcement says.
It also states that the strong economic recovery that began in 2021 has gained a lot of strength this year. It is driven by a large number of tourists and increased private consumption. Both exceeded expectations when the budget was approved for the year.
“Unemployment has fallen faster than expected, even if never before have more people immigrated to the country than from the first nine months of the year than in 2022. The recovery has been so strong that many OECD member countries will see higher economic growth this year. Inflation has also risen this year, far beyond what was predicted when the budget was approved for the year,” he continues.