Iceland’s economy continue to expand in Q4

Iceland's economy continued to expand in Q4, suggesting that the country remains well on the road to recovery.

In Q4, seasonally-adjusted GDP rose by 0.2% on the quarter after an 4.1% increase in Q3. 

Note that Q1's and Q2's contractions were also revised smaller. Overall, the Icelandic economy grew by 1.9% in 2014 as a whole.

The breakdown was reasonably encouraging. Household spending growth was particularly strong in Q4, rising by 1.6% on the quarter. Over 2014 as a whole, household spending rose by 3.7%. 

Capital Economics notes in a report on Tuesday:

• The Icelandic economy still faces risks, not least the removal of capital controls, which is scheduled for later this year. But overall, today's data confirm that the recovery is continuing steadily.
• This should be sufficient to prevent the Sedlabanki from cutting rates at next week's policy meeting, even though inflation remains well below target.