Nordic & Swiss Economics

Nordic & Swiss Economics Focus

21 February, 2018

Iceland: What went right and what might go wrong?

Icelandic growth is set to hold up well with tourism booming despite the strength of the króna and with the financial imbalances that caused the previous crisis largely resolved. But inflation is a threat. If unions secure large wage gains in negotiations this year, the Central Bank of Iceland (CBI) might have to hike interest rates aggressively, potentially causing sharp downturns in asset prices and economic growth.

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