Iceland considers lifting capital controls

BIRGIR THOR HARDARSON ICELAND OUT

Ottarr Proppe (L), leader of Bright Future, Bjarni Benediktsson (C), leader of the Independence Party, and Benedikt Johannesson (R), leader of the Reform party introduce an agreement on a new coalition government in a press conference in Reykjavik, Iceland, 10 January 2017. The new Icelandic government will consist of three parliamentary parties after the early elections in Iceland last October. The Independence Party, the Reform Party and Bright Future will make up the new majority in the Althingi Parliament. The elections were called after Sigmundur David Gunnlaugsson resigned as Prime Minister in April after being associated with the Panama Papers leak.

Iceland considers lifting capital controls


Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn
+

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.

 

Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn
+