Iceland Leading Indicator - Tourism and debit card turnover in focus

REYKJAVIK, Iceland, March 17, 2016 (GLOBE NEWSWIRE) -- The Analytica Composite Leading Indicator (CLI) for Iceland continued its rise in February, now by 0.3 percent on the month, following a rise of an upwardly revised 0.3 percent in January. The value of the indicator in upswing has not been higher since 2006. The CLI indicates growth above long term trend.

The rise of the February CLI can mainly be attributed to a strong growth in tourist arrivals, a rise in debit card turnover and increased fish catches. The trend in tourist arrivals indicates strong growth this year. 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 February five of the six underlying components are strengthening year on year. However, three 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 February rises by 0.3 percent on the month to 103.2. This value serves as an indicator to economic activity six months into the future, i.e. August 2016. A value of 100 indicates GDP in line with its long term trend.

The March Composite Leading Indicator is scheduled for release on April 19, 2016.