Tourists to thank for Iceland’s economic growth

Tourists are to thank for the very strong growth currently enjoyed by the Icelandic economy, with tourist numbers expected to almost double over the next three years.

Latest estimates from Icelandic bank Landsbankinn point to an enviable 6.1% rate of economic growth for 2016. Without the growth generated by tourism this year, that figure would be a considerably lower 1.2%.

The bank also forecasts average growth for the Icelandic economy of 4.2% over the period 2017-19. Again, tourism will be accounting for the lion’s share of this growth, and without it the economy would grow by just 1.9%, all other things being equal.

Figures from the Icelandic Tourist Board suggest, however, that there is no shortage of extra tourists planning to visit Iceland. While 2015 saw the arrival of 1.26 million foreign travellers, it is expected to take just three more years (i.e. 2019) for the number to double to 2.5 million.

The rate of increase in tourist numbers is expected to fall in the coming years, however, as a strengthening national currency and a shortage of tourist accommodation begin to bite.

While the year-on-year increase from 2015 to 2016 is expected to be 35%, forecasts suggest that rate will fall to +25% next year, +10% in 2018, and +8% in 2019.

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