Bloomberg News

Iceland Economy Grew 4.7% in Third Quarter as Recovery Continues

December 07, 2011

Dec. 7 (Bloomberg) -- Iceland’s economy grew in the third quarter as the first western nation to succumb to the global financial crisis in 2008 shows signs of a sustained recovery.

Gross domestic product expanded 4.7 percent from the second quarter, after shrinking a revised 3.6 percent in the previous three-month period, the Reykjavik-based statistics office said in a statement on its website today. Output expanded 4.8 percent from a year earlier, the office said.

Iceland is emerging from its 2008 banking meltdown as the euro area sinks deeper into its debt crisis. It costs less to insure against an Icelandic default than it does to guard against a credit event in the common currency bloc, credit default swaps show. Iceland’s government successfully tapped international debt markets in June while Arion Bank hf, formerly Kaupthing Bank hf, said this month it may sell Eurobonds in the next 12 months.

Exports grew 6.8 percent from the previous quarter, while household spending increased 1.1 percent, the office said. Overall national expenditure rose 1.6 percent.

Iceland’s economy will grow 2.6 percent this year, driven by consumer spending and fixed investments, the statistics office said Nov. 24. The island’s output will expand 2.4 percent in 2012, it said.

--Editors: Tasneem Brogger, Christian Wienberg.

To contact the reporter on this story: Omar Valdimarsson in London at valdimarsson@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


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