Iceland Leading Indicator - Economic growth pickin

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Posted On: 11/16/2017 4:00:21 AM

Posted By: News Desk 2018

Iceland Leading Indicator - Economic growth picking up steam?

REYKJAVIK, Iceland, Nov. 16, 2017 (GLOBE NEWSWIRE) -- The Analytica Composite Leading Indicator (CLI) for Iceland rose in October for the third month in a row – this time by 0.7 per cent. The values for several earlier months were revised upwards. There are now tentative indications that the current CLI rise indicates the renewal of faster growth.

Five of the six components rise on the previous month. The largest contributions are due to a rise in the value of fish catches, merchandise imports and the Gallup Index of Consumer Confidence. Also noteworthy is the positive contribution of the growth in tourist numbers. The long-term trend of some important CLI components remains strong. The main risk factors continue to include some external factors mainly in relation to the geopolitical situation. However, there is now reduced risk due to a prolonged government crisis.

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 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 October, four of the six underlying components rise 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 October rises to 101.2 or by 0.7 per cent. This value serves as an indicator to economic activity six months into the future, i.e. April 2018. A value of 100 indicates GDP in line with its long-term trend.


Table 1. Analytica's CLI 2016-2017

		Change in %				Indication
	Index	on month		YOY		for month
2016
October	100.8	-0.2	%	0.1	%	April 2017
November	100.5	-0.3	%	-0.3	%	May
December	100.1	-0.4	%	-0.9	%	June
2017
January	99.8	-0.3	%	-1.3	%	July
February	99.9	0.0	%	-1.3	%	August
March	100.0	0.1	%	-1.2	%	Sept.
April	99.8	-0.1	%	-1.3	%	Oct.
May	99.5	-0.3	%	-1.5	%	Nov.
June	99.2	-0.3	%	-1.8	%	Dec.
July	99.2	-0.1	%	-1.8	%	Jan. 2018
August	99.6	0.5	%	-1.4	%	Feb.
September	100.4	0.8	%	-0.5	%	March
October	101.2	0.7	%	0.4	%	April