Iceland's GDP falls sharply

REYKJAVIK, Iceland, Dec. 7 (UPI) -- Iceland's gross domestic product fell 7.2 percent on an annual basis in the third quarter and 5.7 percent from the second quarter, the government said.

The year-on-year comparison was the largest decline on record, The Times of London reported Monday.

Iceland's economic collapse began last winter, with the failure of its three largest banks, Kaupthing, Landsbanki and Glitnir. Since then, domestic spending has dropped sharply "because there is still no fully functioning financial system," Peter Sandgren, the head of money markets at Swedish banking group SEB.

Separately, both the Organization for Economic Co-operation and Development and the Icelandic government have forecast economic growth would not return to Iceland until at least the end of 2010.