Investor Presentaiton
The development of GDP looks bleak in the short term
The spread of Covid-19 and subsequent bans on travel and public gatherings have a very negative effect on the Icelandic economy
GDP growth
In a short time the world has changed. It's
likely that the world economy will experience
6.6%
4.7%
4.5%
3.8%
its worst recession since the Great
Depression. The Great Lockdown, as
2.1%
1.9%
Estimated GDP per capita in 2020 (2011 international
dollar, thous.)
6.0%
47
named by the IMF, will heavily impact the
Icelandic economy due to its dependency on
tourism
According to the IMF's latest forecast
Iceland's GDP could shrink by 7.2% in 2020,
followed by a strong rebound in 2021.
Despite a larger contraction than in other
Nordics GDP per capita will remain high
There is great uncertainty surrounding all
economic forecasts at this time and it is
impossible to quantify the effects as of yet.
As stated by the IMF "much worse growth
outcomes are possible and maybe even
likely"
As the Chief Epidemiologist has hinted that
some sort of travel restrictions will remain in
-7.2%
2014 2015 2016
Iceland
2017 2018 2019 2020E 2021E
Other Nordics
Euro area
*IMF forecast
Tourism contribution to GDP (Arion Bank estimates)*
Other Nordics
45
Iceland
36
Euro area
Tourist arrivals via KEF airport (millions and YoY growth)
10%
9%
9%
2.5
8%
9%
9%
5%
24%
-14%
8%
7%
8%
2
40%
7%
6%
force throughout the year it's clear that
6%
5%
4% 5%
tourist arrivals will drop dramatically. By how
much is impossible to tell but Arion Bank's
base case assumes roughly a 60% drop
5%
4%
1.5
30%
24%
1
-60%
3%
2%
0.5
1%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
0
2014 2015
2016 2017 2018 2019 2020E
*2020 forecast not available
5
Sources: IMF, Icelandic Tourist Board, Statistics Iceland, Arion Bank.
*View entire presentation