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.

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.