Iceland’s biggest IT company CCP is what the island needs to leave its economic crisis behind. It is global, growing and employs hundreds but its tale is also one of frustration that echoes concerns about the country’s future.
For CEO Hilmar Petursson, Iceland’s lauded recovery model that included a sharp currency fall coupled with capital controls may have pulled a $13-billion (U.S.) economy back from the brink after a 2008 bank crash. But it is now a drag on firms like his.
“The economic remedy has now become part of the problem ... We are not building the company as fast as we could from a global perspective,” said Petursson, seated at his office in a former fishing processing plant littered with vampire books and a huge games console.
Iceland is growing at 2 per cent, faster than much of Europe. But Petursson’s comments underscore worries about the recovery’s sustainability in a straightjacket of capital controls – coupled with questions over having a currency that one politician compared to the Disneyland dollar.
Growth has been downgraded this year from 3 per cent to 2 per cent. Inflation is stubbornly high and the central bank has been forced to step up intervention in the currency market to prop up a weakening crown.
Many expected Iceland’s recovery to be stronger given the way smaller economies can bounce from deep recessions. The International Monetary Fund had originally forecast annual growth of around 4.5 per cent from 2011-2013. It now is under half that.
“Recovery? We’re on the road to nowhere,” said Vilhjalmur Egilsson, head of the Confederation of Icelandic Employers.
Read more: Icelanders question their lauded economic recovery - The Globe and Mail
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