June 26, 2016
An NYT article on the upcoming elections in Iceland told readers that, “gross national income per capita is down by a quarter since 2007.” The I.M.F. doesn’t agree. According to the I.M.F. data, per capital GDP in Iceland is around 2.0 percent higher now than its pre-recession peak. That is a very different story.
In fairness, the NYT piece refers to gross national income (GNI), not gross domestic product. Generally these are very close, but in a small country like Iceland they may differ by large amounts. GDP is usually the preferred measure, but it can be inflated by things like foreign companies claiming profits in the country for tax purposes, as happens in Ireland.
If the NYT’s GNI numbers are correct, it is most likely due to foreign profits of Iceland’s major banks in the bubble years before the crisis. It’s not clear that the loss of these profits, which were based on speculation and fraud, is a negative for Iceland’s economy.
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