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November 14, 2011

REYKJAVIK, Nov 14, 2011 (AFP)
Iceland said Monday it has adopted a new growth strategy that aims to increase investments to rebalance the economy of the island nation hit hard by the 2008 global financial crisis.

“The programme is based on a new economic growth model, focused on supply-driven sustainable growth,” the economy ministry said in a statement, adding thyat previous measures were based on short-term projects that tended to overheat the economy.

“Going forward, the aim is to increase investment and use the opportunities created by the current economic situation for a more diverse private sector, innovation and productivity,” it added.

Before the 2008 crisis broke, Iceland’s economy was booming, driven by what turned out to be a hugely overstretched banking sector which had assets worth 11 times the country’s total gross domestic product (GDP).

The fall from grace was brutal, with the island nation’s three major banks going belly-up within a matter of weeks and the economy cut adrift.

Since then, Iceland has gone through much soul-searching and a string of painful changes to put its house in order, helped by a $2.1 billion bailout from the International Monetary Fund (IMF).

The ministry said economic policy in the coming years will focus on improving the economic competitiveness of the country which is now seeking EU membership and lay the foundations for export-driven growth.

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