The recovery – or not – in Iceland has become a hugely popular topic for modern day learned querelles of economists. Is Iceland doing better than Ireland is a question that’s already been floating around for some time. And now, how does Iceland compare with the Baltic countries, which themselves have been branded as a miracle, especially Latvia. The latest ground for miracle contest – Iceland vs Ireland/Baltic states – is the Maurice Greenberg Center for Geo-economic Studies blog, on the Council on Foreign Relations website.
Back in July 2010 the question on the CFR website was Post-Crisis Iceland: Miracle or Illusion? The question was prompted after Paul Krugman had been writing on Iceland as the perfect solution for indebted EU countries. Krugman got his outcome by a clever choice of period to analyse. Now, CFR has revisited the question and conclude there is no miracle (with links to some articles on Iceland’s economic recovery).
Miracle or not, Iceland is doing pretty well. Here is the latest overview on Iceland from the IMF. The conclusion is:
Iceland is gradually emerging from its severe post-crisis recession. Domestic demand is driving growth and unemployment is declining, but inflation remains high. Imbalances are unwinding, but all sectors of the economy remain highly leveraged. The outlook is for a moderate recovery, but risks emanate from both external and domestic sources.
In a recent interview on Ruv, Gylfi Zoega professor of economics at the University of Iceland pointed out that the crisis in Iceland had come to an end. Icelanders may not quite notice it yet – and a crisis in euroland may derail it – but on the whole, economic key data in Iceland points firmly in this direction of “crisis over” – and growth has returned.
*Here is a recent Icelog from March on Ireland and Iceland.Follow me on Twitter for running updates.