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New macroeconomic research: Growth period over for now - policy rate cuts on the horizon

After a period of continuous economic growth since 2011, a turning point has been reached in the economic cycle. Following shocks in the fishing and tourism sectors, the outlook is for economic contraction this year. This contraction will be slight and short-lived.

Despite above trend growth in the past several years, the economy is much better balanced and more robust than at the end of previous expansion periods in Iceland.

A combination of relatively high policy rates and strong Treasury position enable firm application of policy instruments to soften the impact of contraction and lay the groundwork for sustainable development as early as next year.

Read the economic forecast for 2019-2021