Iceland Leading Indicator - Increased Domestic Demand Growth

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| Source: Analytica

REYKJAVIK, Iceland, April 16, 2015 (GLOBE NEWSWIRE) -- The Iceland Composite Leading Indicator (CLI) rose by 0.4 percent in March. This is the seventh consecutive rise of the indicator. The CLI continues to hint at growth picking up in early 2015.

For the past months tourism growth and increasing fish catches have served as the main factors behind the CLI rise. However, now there are stronger indications of increased growth of domestic demand. Merchandise imports are growing at a brisk pace, debit card turnover is on the rise and the Gallup index of Consumer Confidence has risen significantly during the past few months. The main risk factors to the positive outlook include the increased likelihood of domestic labor action and some external factors mainly in relation to the geopolitical situation.

Turning points of the CLI tend to precede turning points in economic activity relative to trend by approximately six months. Economic activity is measured by Gross Domestic Product (GDP) published by the Statistical Bureau of Iceland. The calculation of Analytica’s CLI is based on methodology adopted by the OECD.

There are six components of Analytica’s CLI. These are: Fish catches, inflation adjusted debit card turnover, number of tourists visiting Iceland, the MSCI World equities index, inflation adjusted imports and the Gallup Index of Consumer Confidence. For March all of the six underlying components are strengthening year on year.

Table 1 shows the development of the CLI during the past twelve months. The value for March rises by 0.4 percent on the month to 102.5. This value serves as an indicator to economic activity six months into the future, i.e. September 2015. A value of 100 indicates GDP in line with its long term trend.

Table 1. Analytica's CLI 2014-2015  
      
  Change in % Indication
 Indexon monthYOY for month
2014     
  March100.9 0.0% 0.1% Sept.
  April100.8 -0.1% -0.1% Oct.
  May100.6 -0.2% -0.3% Nov.
  June100.4 -0.2% -0.6% Dec.
  July100.1 -0.3% -1.0% Jan. 2015
  August100.0 -0.1% -1.3% Feb.
  September100.0 0.1% -1.4% March
  October100.3 0.2% -1.2% April
  November100.6 0.3% -0.8% May
  December101.0 0.4% -0.2% June
2015     
  January101.5 0.5% 0.5% July
  February102.0 0.5% 1.1% August
  March102.5 0.4% 1.6% Sept.
          

The April Composite Leading Indicator is scheduled for release on May 19, 2015.

Further information is provided by Analytica’s CEO, Mr. Yngvi Hardarson
Tel. +354 5278890 - email: yngvi@analytica.is