Iceland’s Finance Ministry slashed its forecast for gross domestic product (GDP) last Tuesday and said the nation’s economy was heading for a deep recession this year.
Foreceasts for GDP are at a contraction of 9.6 per cent for 2009 as well as 2010. The source of the deep recession lies at the collapse of Iceland’s financial system in autumn 2008, when three commercial banks collapsed, forcing Iceland to seek help from the International Monetary Fund as well as several Europen countries.
As well as negative growth over the next two years, Iceland’s unemployment rate is rising to approximately 7.8 per cent this year and the figure is expected to rise even higher in 2010.
As the economic crisis unfolds in Iceland, political territory is becoming slippery. On Monday, Iceland’s Commerce Minister, Bjorgvin Sigurdsson, announced his resignation, saying he wanted to take responsibility for the economic crisis.
According to local newspapers, Iceland’s leaders say the economic crisis could bring down the country’s government within 24 hours.
As the country struggles to keep afloat in current times, citizens are becoming impatient. On Saturday an estimated 6,000 demonstrators gathered to call for the government to step down immediately.
Image by lydur under Creative Commons.
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