After a long period of unbalanced growth, the Icelandic economy has entered a deep recession following the failure of its major banks. The economy is projected to shrink until early 2010 and unemployment to soar over the next two years. Following a large depreciation of the currency, inflation is projected to spike higher, though to fall back sharply once the exchange rate effects have passed through and the effects of substantial economic slack come to bear. The current account deficit should decline markedly.

The number of broadband subscribers in the OECD rose to 235 million by December 2007, up 18% from 200 million subscribers in December 2006.This growth increased broadband penetration rates to 20 subscriptions per 100 inhabitants, up from 16.9 in December 2006.

Expansionary government measures have rekindled demand and inflation pressures at a time when imbalances in the economy remain substantial. Still, tight monetary policy is expected to eventually succeed in slowing the economy, taming inflation and reducing imbalances. However, the slow and uneven adjustment process leaves the economy vulnerable to changes in foreign investor sentiment, especially in a context of fragile global financial market conditions, and has increased the risk of a harder landing of the economy.

Despite the dot.com crash of 2001, growth in broadband has been strong. Indeed, the number of broadband Internet connections in OECD countries has risen from an average of 2.9 subscribers per 100 inhabitants in 2001 to 13.6 per 100 in December 2005.

Berglind Ásgeirsdóttir of Iceland joined the OECD as one of its four deputy secretaries-general on 2 September. The three other deputy secretaries-general are Richard Hecklinger of the United States, Seiichi Kondo of Japan and Herwig Schlögl of Germany. Ms Ásgeirsdóttir came from the Icelandic social affairs ministry, where as secretary-general she led work in sectors including employment, social services, housing, migration and refugee issues, gender equality and child welfare. Until 1999 she was secretary-general of the Nordic Council, a co-operation body based in Copenhagen and serving the parliaments of Denmark, Finland, Iceland, Norway and Sweden, where she implemented major reforms.