Iceland on road to recovery: IMF
Recession-hit Iceland is well on the road to recovery six months after the spectacular collapse of its banking sector, with an economic "turnaround" possible later this year, the IMF said on Friday.
By Agencies |
REYKJAVIK: Recession-hit Iceland is well on the road to recovery six months after the spectacular collapse of its banking sector, with an economic "turnaround" possible later this year, the IMF said on Friday.
"A lot of good progress has been made," said Mark Flanagan, head of an IMF mission that has spent the last two weeks evaluating the Icelandic economy, the beneficiary of a $2.1bn (1.6-billion-euro) loan from the IMF.
"The mission found that the macroeconomic outlook remains broadly in line with that foreseen in the program," the International Monetary Fund added in a statement, referring to measures taken by Iceland to revive economic momentum.
"The crisis has led to a sharp drop in economic activity, but a late-year turnaround remains within reach," the Fund said. The IMF currently foresees a 10-10.5% contraction in Iceland's economy this year.
Iceland's previous prosperity had been heavily based on its robust banking sector and the country consequently suffered a major macroeconomic blow when its key lending institutions were laid low by the global finance meltdown.
The government last October had to take control of the country's three leading banks that found themselves short of liquidity. The collapse outraged the general public, with many people losing jobs and some of their savings.
Prior to the crisis, Iceland had been among the world's richest countries, with growth averaging 4.0 percent a year. The economy expanded 7.7% in 2004 and 5.5% in 2007 before a gain of just 0.3% last year.
Buckling under the strength of the economic storm, and the political protests it unleashed, Iceland's government resigned in late January and early legislative elections are planned for April 25.
"A lot of good progress has been made," said Mark Flanagan, head of an IMF mission that has spent the last two weeks evaluating the Icelandic economy, the beneficiary of a $2.1bn (1.6-billion-euro) loan from the IMF.
"The mission found that the macroeconomic outlook remains broadly in line with that foreseen in the program," the International Monetary Fund added in a statement, referring to measures taken by Iceland to revive economic momentum.
"The crisis has led to a sharp drop in economic activity, but a late-year turnaround remains within reach," the Fund said. The IMF currently foresees a 10-10.5% contraction in Iceland's economy this year.
Iceland's previous prosperity had been heavily based on its robust banking sector and the country consequently suffered a major macroeconomic blow when its key lending institutions were laid low by the global finance meltdown.
The government last October had to take control of the country's three leading banks that found themselves short of liquidity. The collapse outraged the general public, with many people losing jobs and some of their savings.
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Prior to the crisis, Iceland had been among the world's richest countries, with growth averaging 4.0 percent a year. The economy expanded 7.7% in 2004 and 5.5% in 2007 before a gain of just 0.3% last year.
Buckling under the strength of the economic storm, and the political protests it unleashed, Iceland's government resigned in late January and early legislative elections are planned for April 25.
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