Iceland’s GDP shrank 3.7% in the first quarter compared to a 0.3% increase in the last quarter, the biggest quarterly contraction in nearly five years. Iceland's annual consumer inflation rate is at 12.3% and the central bank increased its interest rates to 15.5% in April. The central bank predicts 2.5% contraction of the economy with a 7% fall in household spending.

The Icelandic krona is the worst performing currency against the euro in 2008 having fallen nearly 30%. Icelandic Prime Minister Geir Haarde said on June 24 that the currency is poised to stabilise at a "stronger level" after falling to below "equilibrium" and dismissed suggestions that Iceland should adopt the euro.

19 May 2008 -

Back from the cold

9 Jun 2008 -

Trying too Haarde