Financial News: Iceland GDP Shrinks 1.1% In Q2

Iceland GDP Shrinks 1.1% In Q2

08/31/2026 - 09:47:00 (RTTNews)

(RTTNews) - Iceland's economy contracted in the second quarter after rebounding strongly in the first quarter, data from Statistics Iceland showed on Monday.

Gross domestic product dropped 1.1 percent sequentially in the second quarter, reversing a 3.8 percent growth in the previous quarter.

Trade in goods was the primary driver of the contraction. A wider trade deficit contributed negatively by 2.9 percentage points to real GDP growth in the second quarter. Exports dropped markedly by 7.3 percent compared to the previous year, while imports increased 0.2 percent.

Meanwhile, gross fixed capital formation grew 5.7 percent, driven by more investments in the business sector. Both household and government consumption advanced by 0.8 percent and 1.2 percent, respectively.

On a seasonally adjusted basis, GDP expanded 3.0 percent compared to the first quarter of 2026.

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