IMF国际货币组织全球-Iceland_2019-Article-IV-Consultation_65页_2mb

Iceland 2019 Article IV Consultation Summary

Core Content

The 2019 Article IV consultation with Iceland by the IMF concluded on December 19, 2019, following discussions in Reykjavík from October 30 to November 12, 2019. The consultation highlighted a significant economic slowdown after years of robust growth, primarily driven by supply disruptions in the tourism sector and associated uncertainty. The IMF acknowledged the appropriate and swift policy response by the authorities, including fiscal relaxation and monetary easing, which helped stabilize expectations and cushion the economic impact.

Main Views

Economic Performance

• Tourism decline significantly impacted economic activity, with a 30% drop in passenger numbers and a 14% decline in arrivals.
• Real GDP growth slowed from over 4.8% in 2018Q4 to 0.3% in 2019, reflecting a contraction in import-intensive investment and a slowdown in consumption.
• Unemployment rose by 1 percentage point year-on-year, mainly due to reduced labor demand and increased net immigration.
• Inflation expectations remained close to the CBI's target of 2.5%, despite a spike in 2018Q4.

Policy Response

• The authorities eased fiscal policy by about 0.5% of GDP in structural terms and relaxed targeted general government balances by 1% of GDP annually.
• Monetary policy was eased by 150 basis points since March 2019, and the CBI reduced policy rates to 3.00% as of November 2019.
• The recent collective wage agreement helped moderate wage growth, reducing the negative impact on employment.

Financial Sector

• Banks' balance sheets are strong with capital adequacy levels at 23% in September 2019, close to required levels.
• Liquidity buffers remain ample, though profitability has worsened due to corporate loan impairments and a slowing real economy.
• Macroprudential policies are helping manage financial stability risks, and the toolkit could be expanded to include loan-to-value (LTV) limits and income-based measures.

External Position

• The current account remains in surplus, and international reserves are at $6.8 billion, well above the Fund's reserve adequacy metric.
• The external position is in line with fundamentals, with a net international investment position (NIIP) estimated at 22% of GDP in mid-2019.
• Iceland's grey-listing by the FATF has increased the urgency for improving the AML/CFT framework.

Structural Reforms

• Structural reforms are seen as key to reigniting long-term growth, including education reforms, greater transparency of unlisted companies, and strategic policies in tourism and fisheries.
• The planned merger of the Central Bank of Iceland (CBI) and the Financial Supervisory Authority (FME) is expected to enhance financial oversight and operational independence.

Key Information

Economic Indicators (2015–2019)

Risks and Outlook

• Downside risks include global trade tensions, weaker-than-expected global growth, the uncertain Brexit process, and further tourism decline.
• Growth recovery is expected to be moderate in 2020 and around 2% over the medium term.
• Inflation is projected to ease and converge to the target.
• Current account surplus is expected to narrow but remain positive over the medium term.

Policy Space

• Fiscal space is available, with some room for further support if needed.
• Monetary easing could be warranted if economic conditions deteriorate significantly.
• The macroprudential toolkit may be expanded to manage financial stability risks.

Institutional Reforms

• The CBI and FME merger is expected to improve efficiency and independence in financial oversight.
• The AML/CFT framework needs further strengthening to address FATF concerns and ensure compliance with international standards.

Political Context

• The three-party coalition remains strong, with support consolidated due to its response to recent economic challenges.
• Presidential elections are scheduled for June 2020, and parliamentary elections are planned for the following year.

Conclusion

The IMF concluded that Iceland's economic fundamentals remain solid, with strong public and private balance sheets, a positive current account, and ample reserves. While the economy faces significant downside risks, the policy response has been appropriate, and structural reforms are crucial for long-term growth and sustainability. The authorities are advised to continue improving the AML/CFT framework and to implement the planned financial oversight reforms to enhance resilience and effectiveness.