Oecd Economic Surveys Iceland 2021

Iceland’s economy is recovering from a deep COVID-19 recession. Fisheries and intellectual services exports are on the rise and foreign tourists are starting to come back as travel restrictions are gradually eased. The health crisis has been relatively mild so far, thanks to a smart testing and tracking strategy and a well-functioning health system.

Canada’s vaccine rollout is bringing the prospect of an end to the COVID-19 crisis and a pick-up in output growth is expected. An ultra-low policy rate and other monetary measures continue to provide substantial support for the economy and fiscal support for households and businesses has been substantial.

The Spanish economy entered a deep recession in 2020 due to the COVID-19 pandemic. A strong government response has protected jobs and firms. However, the crisis has exacerbated long-standing structural challenges, such as high unemployment, inequalities and regional disparities.

Iceland's economy is recovering from a deep COVID-19 recession. Fisheries and intellectual services exports are on the rise and foreign tourists are starting to come back as travel restrictions are gradually eased. The health crisis has been relatively mild so far, thanks to a smart testing and tracking strategy and a well-functioning health system. After a sharp rise during the pandemic, unemployment is declining fast, and inflation hovers above target. Appropriate macroeconomic policy coupled with structural reforms are needed for a sound recovery and sustainable growth. The central bank should remain vigilant and fiscal support should continue to target vulnerable groups. Reducing stringent regulation, especially in tourism and construction, would help shift resources to more productive firms and jobs. Strengthening vocational education and training, and linking part of university funding to labour market outcomes would reduce labour shortages and skills mismatch. Offering better-targeted support for business R&D, encouraging the adoption of digital technologies and facilitating knowledge transfer would boost innovation and productivity. Submitting all economic sectors to carbon pricing - either a carbon tax or an emission trading system - while redistributing the proceeds to households and firms will be key for a cost-efficient and equitable transition to a low-carbon economy. SPECIAL FEATURES: INNOVATION; CLIMATE CHANGE

Iceland’s economy is one of the fastest-growing in the OECD, driven by foreign tourism and strong domestic demand. The labour market is tight and wage growth robust, while high wage compression helps maintain a highly egalitarian economy.

Italy’s economy is recovering steadily from the COVID crisis, thanks to the vaccination campaign and generous fiscal support to households and firms. Risks to the outlook are large, including virus variants and the path of global interest rates.

Indonesia experienced its first recession in over two decades in 2020, although large-scale fiscal stimulus and monetary support limited its depth and impact. The approval of an ambitious package of structural reforms, covering labour laws, taxes and ease of doing business, testifies of the authorities’ commitment to attract high-quality investment that will enhance wealth and well-being.

Structural and institutional strengths, a strong crisis response and a high level of digitalisation have helped the Netherlands to weather the COVID-19 crisis with so far limited economic damage compared to many OECD countries. Several long-standing challenges are set to affect the strength of the recovery and its long-term sustainability.