The revised annual national accounts for 2016 show a 7.4% increase in Gross Domestic Product (GDP) in real terms, compared to 7.2% shown in preliminary annual national accounts published earlier this year. The economic growth in 2016 is mainly driven by an 8.9% increase in the gross domestic final expenditure.
Household final consumption increased by 7.1% and government final consumption by 1.9% while gross fixed capital formation (GFCF) increased by 22.8%, the largest increase in GFCF since 2006. A considerable increase of 26.4% was observed in the business sector GFCF, as well as in residential construction of 29.4%. The share of GFCF was 21.3% of GDP in 2016 which is close to the historical average.
At the same time, exports grew by 10.9% and imports by 14.5%. Service exports amounted to 26.8% of GDP and outweighed the exports of goods for the first time in the history of Icelandic National Accounts dating back to 1945. This resulted in a 155.4 billion ISK surplus in the balance of trade in goods and services in 2016. Despite a large foreign trade surplus, a higher growth in imports compared to that of exports contributed to a decreased growth in GDP.
Surplus in the balance of trade and in primary income from abroad, according to figures from the Central bank of Iceland, results in a large current account surplus in 2016, or 201 billion ISK or 8.2% of GDP. During 2016 the terms of trade improved by 1.4% of GDP of the previous year. This development and the positive current account balance led to 11.3% growth in GNI.