ICELAND'S FIRM DISCRETIONARY SPENDING.

With a population of 0.3 million, Iceland is home to one of the worlds smallest consumer bases, yet the levels of household income and discretionary spending are among the worlds highest. To a great degree, this is attributable to the nations very equitable distribution of wealth.

Icelands purchasing power parity per capita of US$28,800 per annum is well above the Northern European average of US$23,500. When we factor in generous housing and social benefits and low utility costs, the discretionary income of Icelanders compares favorably with the worlds highly industrialized nations.

Consumer confidence slipped as the global economic downturn dropped Icelands average annual economic growth for 2002 and 2003 to just over 1 percent. Lingering concerns relate to depletion of commercial fish species that account for 70 percent of the nations exports. Nevertheless, the jobless rate is likely to hover below 2.5 percent in 2004 as the governments economic diversification plans contribute to job creation. Consumer confidence should rebound as the year progresses, and that will contribute to year-on-year growth in sales of high-end durable goods approaching 5 percent by the third quarter.

According to data released by the PRB, Iceland has the youngest consumer base in Northern Europe, with 23 percent of the populace below the age of 15. Youth will have a particularly important voice in purchasing decisions related to purchases in the apparel, beverage, entertainment, and food sectors. Icelands population is projected to grow 31 percent from 2003 through 2050, and that will boost demand for non-durable goods.