Weekly bulletin 29 April 2024
Economic growth will be limited in coming years according to our newly published macroeconomic forecast up to and including 2026. We forecast 0.9% growth this year, 2.2% next year and 2.6% in 2026. We expect inflation to recede down to 5.5% by the fourth quarter of this year. A rate-cutting cycle will begin in October, so our forecast, and we expect the economy to pick up speed alongside falling interest rates.
29 April 2024
The week ahead
- Marel publishes results today.
- On Tuesday, Eurostat releases inflation figures for April and national accounts for the first quarter in the Eurozone.
- On Wednesday, the US Federal Reserve announces its interest rate decision.
- The CBI published the results of its market expectations survey on Thursday. Eik fasteignafélag, Íslandsbanki, Kvika Bank and Landsbankinn publish results.
- On Friday, unemployment statistics in the US will be released.
Image of the week
In our newly published economic forecast, we expect to see continued economic growth despite an unchanged policy rate of 9.25% until October. Growth will however be limited in coming years, a mere 0.9% this year, 2.2% in 2025 and 2.6% in 2026. Private consumption and investment will show moderate growth and tourist arrivals will grow much slower than initially in the post-pandemic era. The economy has proved resilient in the past few months and inflation has been persistent. Because of this, we do not expect the policy rate to be lowered until this fall.
Highlights of the previous week
- The CPI rose by 0.55% between months in April, bringing the 12-month change down from 6.8% to 6.0%. Inflation receded slightly more than we expected - we had assumed a 0.61% increase between months and for annualised inflation to rise to 6.1%. Two components had the largest impact by far on the measurement this time, accounting for 95% of the increase between months: imputed rent and international air fares. We expect inflation to remain at around 6% in the next three months.
- GDP growth measured 1.6% between quarters (annualised basis) in the US in the first quarter.
- Festi (investor' presentation), Fly Play, Hagar (investor presentation), Icelandair (investor presentation) and Síminn published results. Sýn released an earnings warning.
Statistics and market data
Disclaimer
This review and/or summary is marketing material intended for information purposes and not for business purposes. This marketing material does not contain investment advice or independent investment analysis. The legal provisions that apply to financial advice and financial analysis do not apply to this content, including the ban on transactions prior to publication.Information about the prices of domestic shares, bonds and/or indices is source from Nasdaq Iceland - the Stock Exchange. Landsbankinn’s website contains further information under each individual equity, bond class or index. Information about the prices of non-domestic financial instruments, indices and/or funds are sourced from parties Landsbankinn considers reliable. Past returns are not an indication of future returns.Information about the past returns of Landsbréf funds is based on information from Landsbréf. Detailed information about the historic performance of individual funds is available on Landsbankinn’s website, including on returns for the past 5 years. Information about the past performance of funds show nominal returns, unless otherwise stated. If results are based on foreign currencies, returns may increase or decrease as a result of currency fluctuations. Past returns are not necessarily an indication of future returns.Securities transactions involve risk and readers are encouraged to familiarise themselves with the Risk Description for Trading in Financial Instruments and Landsbankinn’s Conflict of Interest Policy, available on Landsbankinn’s website. Landsbankinn is licensed to operate as a commercial bank in accordance with Act No. 161/2002, on Financial Undertakings, and is subject to supervision by the Financial Supervisory Authority of the Central Bank of Iceland (https://www.cb.is/financial-supervision/)You may also be interested in
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21 Oct. 2024
Last week, we published an economic forecast to the year 2027. The housing price and rental price indexes decreased more between months in September and household payment card turnover contracted between years domestically while rising abroad. The Central Bank of Iceland (CBI) published the minutes of the Monetary Policy Committee (MPC) meeting, which shows that all Committee members agreed to lower the policy rate. Several companies publish financial results this week.
15 Oct. 2024
Landsbankinn Economic Research forecasts a status quo in the economy between years and a 0.1% contraction in GDP. Setbacks affected the export sector in the first half of the year, with capelin catch failure and slower growth in the travel sector causing a contraction. This has been compounded by the cooling impact of high interest rates on demand, which nevertheless remains strong.
14 Oct. 2024
Tomorrow morning, Landsbankinn Economic Research presents a new economic forecast to the year 2027 at a morning meeting in Harpa. This week, the Housing and Construction Authority (HMS) publishes the housing price index, the rental price index and its monthly housing market report. On Wednesday, the Central Bank of Iceland (CBI) releases the minutes of the Monetary Policy Committee’s last meeting. Last week’s highlight was that traveller numbers to Iceland are slightly up between years in September and there is a small uptick in unemployment.
7 Oct. 2024
The Monetary Policy Committee (MPC) of the Central Bank of Iceland (CBI) lowered the policy rate last week, for the first time in four years. The CBI’s key interest rate is now 9% after having stood unchanged at 9.25% for over a year. Inflation in the eurozone remains on a downward trajectory, measuring 1.8% in September, below the 2% inflation target. Inflation figures for the US will be published this week.
30 Sept. 2024
Inflation was slightly lower than expected in September, down from 6.0% to 5.4%. We nevertheless expect that the Monetary Policy Committee (MPC) will wish to proceed with caution when it meets early this week and that it will keep the policy rate unchanged on Wednesday.