Iceland Leading Indicator - Tourism Still a Driving Force

REYKJAVIK, Iceland, Feb. 17, 2016 (GLOBE NEWSWIRE) -- The Analytica Composite Leading Indicator (CLI) for Iceland continued its rise in January, now by 0.2 percent on the month, following a rise of a revised 0.2 percent in December. The value of the indicator in upswing has not been higher since 2006. The CLI still indicates growth above long term trend.

The rise of the January CLI can mainly be attributed to rising consumer confidence, a strong growth in tourist arrivals and a rise in debit card turnover. The local expenditure of tourists is actually growing significantly more than their number. The main risk factors to the still positive outlook continue to include some external factors mainly in relation to the geopolitical situation and the increased uncertainty concerning growth prospects for emerging markets and China.

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 January five of the six underlying components are strengthening year on year. Also, five of the six components rise on the previous month.

Table 1 shows the development of the CLI during the past twelve months. The value for January rises by 0.2 percent on the month to 102.8. This value serves as an indicator to economic activity six months into the future, i.e. July 2016. A value of 100 indicates GDP in line with its long term trend.

The February Composite Leading Indicator is scheduled for release on March 17, 2016.