Iceland's economy surged last year, data released Thursday showed, as dynamic tourism and investment powered a strong recovery from a devastating 2008 economic collapse. Iceland Statistics' preliminary figures showed 7.2 percent growth for 2016 with GDP soaring by 11.3 percent in the fourth quarter compared to the same period the previous year.
Iceland's economy has now expanded by 10 percent from its size before the 2008 financial crisis, which pulled the Nordic nation into a virtual bankruptcy as its bloated banks fell into an abyss. The island nation of 332,000 people is experiencing a spectacular recovery that allowed it to repay in October 2015 a loan granted by the International Monetary Fund (IMF), which was the first loan in 20 years by the institution to a Western country.
Iceland's economy is growing continuously despite a Russian embargo on European fish and the declining prices of aluminium, of which it is a major exporter. GDP grew by 4.2 percent in 2015 after 1.9 percent in 2014. Service exports amounted to 26.8 percent of GDP and outweighed the exports of goods "for the first time in the history of Icelandic National Accounts dating back to 1945", Iceland Statistics said. This reflects a rise in tourism numbers which jump by 30 percent on average every year. The government has also encouraged wage increases and public spending, especially on infrastructure.
Household consumption rose by 6.9 percent last year and public expenditure by 1.5 percent. Fixed capital investment jumped 22.7 percent from 2015, the highest in ten years. Investment in housing construction climbed by 33.7 percent and public works by 2.5 percent.
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