Cooler times advanced
The accompaniment of the Icelandic abridgement has adapted back our endure forecast, afterwards the deepening of the sub-prime crisis on the all-embracing markets. The abridgement is added cooling down, aperture up the achievability that the Central Bank of Iceland will cut absorption ante eventually than ahead forecast.
Highlights of the forecast:
- Economic advance in 2008 will be low due to abbreviating clandestine burning and beneath investments. Kaupthing Research expects bread-and-butter advance levels about 3.3% in 2007, 0.9% in 2008, 2.5% in 2009 and 4.6% in 2010. Growth in 2009 and 2010 will mainly be apprenticed by a turnaround in exports, attributed to college aluminium exports and beneath imports.
- The accepted anniversary arrears is accepted to bead from 26% of GDP in 2006 to 12% of GDP in 2007. Moreover, we apprehend the arrears will be about 10% for 2008, 8% for 2009 and 6% of GDP for 2010. Research expects the advertisement of a new aluminium smelter in Helguvík and that architecture will arise this year.
- The ISK will abate this year, according to our forecast. The boilerplate amount of the barter abounding basis will be 136 credibility in mid year 2008, although we apprehend it to acknowledge afresh hardly at the end of the year.
- Inflation will abatement rapidly throughout 2008. The Central Bank is accepted to ability its aggrandizement ambition of 2.5% in the aboriginal bisected of 2009, mainly due to a air-conditioned down in the absolute acreage market.
- Research expects absorption action amount cuts this year, starting in February and extensive 9.75% at the end of this year. The everyman akin will be accomplished in 2009, area absorption ante are accepted to hit 6.5%.
- Yields on Icelandic bonds are accepted to abatement in 2008 and the aboriginal division of 2009, primarily due to lower absorption rates. If our anticipation is correct, the 12 ages acknowledgment will be almost high.
To apprehend the accomplished forcast visit: www.kaupthing.com/lisalib/getfile.aspx?itemid=13597
Author:
Asgeir Jonsson, arch of the appraisal administration of Kaupthing Bank.
asgeir.jonsson@kaupthing.com
About Kaupthing Bank
Kaupthing Bank offers absolute bartering and investment cyberbanking casework to individuals, companies and institutional investors. The Bank is a arch amateur in all the capital areas of the Icelandic banking market, and in accession to Iceland, the Bank's key markets are Denmark and the United Kingdom. The Bank focuses on the advance and development of its all-embracing activities and aims to be one of the arch investment banks in arctic Europe.
Kaupthing Bank operates in thirteen countries with its address amid in Reykjavík. The Bank's capital subsidiaries are FIH Erhvervsbank in Denmark, Kaupthing Singer & Friedlander in the United Kingdom, Kaupthing Bank Sverige, Kaupthing Bank Luxembourg, Kaupthing Bank in Finland, Norvestia Oyj in Finland, Kaupthing New York, Kaupthing Switzerland, Kaupthing Bank Belgium and Kaupthing Bank Norge in Norway. The Bank aswell has activities in Isle of Man, the United Arab Emirates (Dubai) and Qatar. As of 31 December 2007 the amount of full-time agnate positions was 3,334 at Kaupthing Bank and its subsidiaries. www.kaupthing.com
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