Iceland is bracing to lift capital controls.
The current Prime Minister Bjarni Benediktsson has also served as the former Minister of Finance and is on the top of the curve when it comes to economic projections. The country has good reasons to consider easing capital controls, for the first time since 2008.
The economy was growing by 6% in 2016 and the Icelandic Krona appreciated by 16% against the Euro. Meanwhile, Inflation is below 2,5% and interest rates remain at 5%, that is, a record for the developed world.
With unemployment below 3%, demand is surging and wage growth in double digits. Overheating rather than stagnation is the biggest fear. And as capital controls eased, there was no capital flight. Now, the economy may move with bolder steps.
Projections for 2017 suggest growth will keep above 5%, decelerating to 2-3% in 2018 and 2019. The new economic boom is founded on tourism rather than financial services, which means the economy appears to be less volatile.